HLI
Houlihan Lokey, Inc.
$130.71
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Overvalued
Trading 24.8% above fair value
You pay
$130.71
Bear
$73.33
Fair
$104.76
Bull
$136.19
Bear
$73.33
-43.9%
ROTCE 20.0% → 2.74x TBV
Fair
$104.76
-19.9%
ROTCE 25.0% → 3.60x TBV
Bull
$136.19
+4.2%
ROTCE 30.0% → 4.00x TBV
Adjust Assumptions
57.3%
9.8%
Key Value Driver
ROTCE (57.3%) vs. cost of equity (9.8%)
Implied Market Multiple
12.31x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (16 analysts)
$159.80
Divergence from AlphaVal
34%
Summary
With ROTCE of 57.3% vs. 9.8% cost of equity, fair P/TBV is 3.60x on $10.62 tangible book, implying $104.76 per share. DDM cross-check: $77.13.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $77.13 (26% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $159.80 (from 16 analysts). Our estimate is 34% below the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly