Financial Analysis: Oppenheimer (NYSE:OPY) vs. Houlihan Lokey (NYSE:HLI)

Houlihan Lokey (NYSE:HLI) and Oppenheimer (NYSE:OPY) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, institutional ownership, valuation, profitability and risk.

Institutional & Insider Ownership

78.1% of Houlihan Lokey shares are held by institutional investors. Comparatively, 32.3% of Oppenheimer shares are held by institutional investors. 22.5% of Houlihan Lokey shares are held by company insiders. Comparatively, 34.9% of Oppenheimer shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Houlihan Lokey and Oppenheimer’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Houlihan Lokey	16.10%	20.20%	11.71%
Oppenheimer	5.72%	19.51%	4.86%

Analyst Ratings

This is a summary of recent recommendations and price targets for Houlihan Lokey and Oppenheimer, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Houlihan Lokey	0	4	7	0	2.64
Oppenheimer	0	0	2	0	3.00

Houlihan Lokey presently has a consensus price target of $161.38, indicating a potential upside of 22.95%. Given Houlihan Lokey’s higher possible upside, analysts plainly believe Houlihan Lokey is more favorable than Oppenheimer.

Valuation & Earnings

This table compares Houlihan Lokey and Oppenheimer”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Houlihan Lokey	$2.52 billion	3.59	$425.70 million	$5.95	22.06
Oppenheimer	$1.64 billion	0.67	$148.40 million	$8.86	11.62

Houlihan Lokey has higher revenue and earnings than Oppenheimer. Oppenheimer is trading at a lower price-to-earnings ratio than Houlihan Lokey, indicating that it is currently the more affordable of the two stocks.

Dividends

Houlihan Lokey pays an annual dividend of $2.80 per share and has a dividend yield of 2.1%. Oppenheimer pays an annual dividend of $0.80 per share and has a dividend yield of 0.8%. Houlihan Lokey pays out 47.1% of its earnings in the form of a dividend. Oppenheimer pays out 9.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Houlihan Lokey has increased its dividend for 9 consecutive years and Oppenheimer has increased its dividend for 1 consecutive years. Houlihan Lokey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Houlihan Lokey has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Oppenheimer has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Summary

Houlihan Lokey beats Oppenheimer on 12 of the 17 factors compared between the two stocks.

About Houlihan Lokey

Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), capital market, financial restructuring, and financial and valuation advisory services worldwide. It operates in three segments: Corporate Finance, Financial Restructuring, and Financial and Valuation Advisory. The Corporate Finance segment offers general financial advisory services; and advises public and private institutions on buy-side and sell-side transactions, leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, as well as advise financial sponsors on various transactions. The Financial Restructuring segment advises debtors, creditors, and other parties-in-interest related to recapitalization/deleveraging transactions. It also provides a range of advisory services, including structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. The Financial and Valuation Advisory segment offers valuations of various assets, such as companies, illiquid debt and equity securities, and intellectual property. It also provides fairness opinions in connection with M&A and other transactions, solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions. In addition, this segment offers dispute resolution services. It serves corporations, financial sponsors, and government agencies. The company was incorporated in 1972 and is headquartered in Los Angeles, California.

About Oppenheimer

Oppenheimer Holdings Inc. operates as a middle-market investment bank and full-service broker-dealer in the Americas, Europe, the Middle East, and Asia. The company provides brokerage services covering corporate equity and debt securities, money market instruments, exchange-traded options and futures contracts, municipal bonds, mutual funds, exchange-traded funds, and unit investment trusts; financial and wealth planning services; and margin lending services. It offers asset management services, including separately managed accounts, mutual fund managed accounts, discretionary portfolio management programs, non-discretionary investment advisory and consultation services, alternative investments, portfolio enhancement programs, and institutional taxable fixed income portfolio management strategies and solutions, as well as taxable and non-taxable fixed income portfolios and strategies. In addition, the company offers investment banking services, such as strategic advisory services and capital markets products; merger and acquisition, equities capital market, debt capital market, debt advisory and restructuring, and fund placement services; and institutional equity sales and trading, equity research, equity derivatives and index options, convertible bonds, event driven sales and trading, and portfolio and electronic trading. Further, it provides institutional fixed income sales and trading, fixed income research, public finance, and municipal trading services; and proprietary trading and investment activities. Additionally, the company offers underwriting, market-making, trust, and discount services, as well as a cloud-based financial market. It serves high-net-worth individuals and families, corporate executives, public and private businesses, institutions and corporations, governments, financial sponsors, and domestic and international investors. Oppenheimer Holdings Inc. was founded in 1881 and is headquartered in New York, New York.