HLI

Houlihan Lokey is the highest-quality independent investment bank in the public market, and its FY2026 results extend a record of resilient growth. Revenue rose 9.5% to $2.62B (a fresh high), operating income grew 4.9% to $527M, net income rose 6.5% to $426M, and diluted EPS climbed 6.9% to $6.22. The firm earns a 20.1% operating margin and 18.2% ROE — strong for an advisory business — and the recovery from the FY2023 deal-drought trough ($254M net income) back to records shows the model's durability. Crucially, HLI's revenue is diversified across Corporate Finance (M&A), Financial Restructuring, and Financial & Valuation Advisory, and the 10-K spells out the natural hedge: weak markets hurt M&A but boost the restructuring (FR) business, while strong markets do the reverse — smoothing earnings across the cycle.

The balance sheet is a fortress for a capital-light advisory firm: $1.19B cash (+22.5%), minimal debt, liabilities/equity of only 0.79x, and retained earnings up 18.0% to $1.65B. The business needs almost no capital ($22.3M capex) and converts profit to cash, funding generous capital return — buybacks more than tripled to $175M and the dividend grew 5.3% to $174M. The slight dip in operating cash flow (-17.0% to $704M) reflects working-capital timing on deal fees, not a deterioration in earnings.