Reviewing Houlihan Lokey (NYSE:HLI) and DigitalBridge Group (NYSE:DBRG)

Houlihan Lokey (NYSE:HLI) and DigitalBridge Group (NYSE:DBRG) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Dividends

Houlihan Lokey pays an annual dividend of $2.28 per share and has a dividend yield of 1.4%. DigitalBridge Group pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Houlihan Lokey pays out 55.5% of its earnings in the form of a dividend. DigitalBridge Group pays out 2.6% 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.

Risk and Volatility

Houlihan Lokey has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, DigitalBridge Group has a beta of 1.95, indicating that its stock price is 95% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Houlihan Lokey and DigitalBridge Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Houlihan Lokey	1	4	1	0	2.00
DigitalBridge Group	0	0	7	1	3.13

Houlihan Lokey currently has a consensus target price of $157.00, suggesting a potential downside of 4.18%. DigitalBridge Group has a consensus target price of $19.22, suggesting a potential upside of 29.59%. Given DigitalBridge Group’s stronger consensus rating and higher possible upside, analysts plainly believe DigitalBridge Group is more favorable than Houlihan Lokey.

Institutional and Insider Ownership

78.1% of Houlihan Lokey shares are held by institutional investors. Comparatively, 92.7% of DigitalBridge Group shares are held by institutional investors. 26.0% of Houlihan Lokey shares are held by insiders. Comparatively, 3.4% of DigitalBridge Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Houlihan Lokey	15.30%	18.80%	11.23%
DigitalBridge Group	35.10%	4.49%	1.87%

Valuation & Earnings

This table compares Houlihan Lokey and DigitalBridge Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Houlihan Lokey	$2.01 billion	5.58	$280.30 million	$4.11	39.87
DigitalBridge Group	$1.08 billion	2.39	$185.28 million	$1.55	9.57

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

Summary

Houlihan Lokey beats DigitalBridge Group on 9 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 DigitalBridge Group

DigitalBridge is an infrastructure investment firm specializing in digital infrastructure assets. They provide services to institutional investors. They primarily invest in data centers, cell towers, fiber networks, small cells, and edge infrastructure. DigitalBridge Group, Inc. was founded in 1991 and is headquartered in Boca Raton, Florida with additional offices in Los Angles, California, and New York New York.