Financial Comparison: Houlihan Lokey (NYSE:HLI) vs. Bank of New York Mellon (NYSE:BNY)

Houlihan Lokey (NYSE:HLI) and Bank of New York Mellon (NYSE:BNY) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, valuation, profitability, dividends and institutional ownership.

Profitability

This table compares Houlihan Lokey and Bank of New York Mellon’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%
Bank of New York Mellon	15.52%	16.00%	1.27%

Analyst Ratings

This is a summary of current ratings for Houlihan Lokey and Bank of New York Mellon, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Houlihan Lokey	0	4	7	0	2.64
Bank of New York Mellon	0	6	7	1	2.64

Houlihan Lokey currently has a consensus price target of $161.38, suggesting a potential upside of 25.55%. Bank of New York Mellon has a consensus price target of $164.85, suggesting a potential upside of 15.64%. Given Houlihan Lokey’s higher possible upside, equities research analysts clearly believe Houlihan Lokey is more favorable than Bank of New York Mellon.

Insider and Institutional Ownership

78.1% of Houlihan Lokey shares are owned by institutional investors. Comparatively, 85.3% of Bank of New York Mellon shares are owned by institutional investors. 22.5% of Houlihan Lokey shares are owned by insiders. Comparatively, 0.2% of Bank of New York Mellon shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Houlihan Lokey and Bank of New York Mellon”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	$2.62 billion	3.39	$425.70 million	$5.95	21.60
Bank of New York Mellon	$40.76 billion	2.37	$5.55 billion	$8.59	16.59

Bank of New York Mellon has higher revenue and earnings than Houlihan Lokey. Bank of New York Mellon 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 2.2%. Bank of New York Mellon pays an annual dividend of $2.52 per share and has a dividend yield of 1.8%. Houlihan Lokey pays out 47.1% of its earnings in the form of a dividend. Bank of New York Mellon pays out 29.3% 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 Bank of New York Mellon has increased its dividend for 14 consecutive years.

Risk & Volatility

Houlihan Lokey has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Bank of New York Mellon has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Summary

Bank of New York Mellon beats Houlihan Lokey 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 Bank of New York Mellon

The Bank of New York Mellon Corporation provides a range of financial products and services in the United States and internationally. The company operates through Securities Services, Market and Wealth Services, Investment and Wealth Management, and other segments. The Securities Services segment offers custody, trust and depositary, accounting, exchange-traded funds, middle-office solutions, transfer agency, services for private equity and real estate funds, foreign exchange, securities lending, liquidity/lending services, and data analytics. This segment also provides trustee, paying agency, fiduciary, escrow and other financial, issuer, and support services for brokers and investors. The Market and Wealth Services segment offers clearing and custody, investment, wealth and retirement solutions, technology and enterprise data management, trading, and prime brokerage services. This segment also provides integrated cash management solutions, including payments, foreign exchange, liquidity management, receivables processing and payables management, and trade finance and processing services. The Investment and Wealth Management segment offers investment management strategies and distribution of investment products, investment management, custody, wealth and estate planning, private banking, investment, and information management services. The Other segment engages in the provision of leasing, corporate treasury, derivative and other trading, corporate and bank-owned life insurance, renewable energy investment, and business exit services. It serves central banks and sovereigns, financial institutions, asset managers, insurance companies, corporations, local authorities and high net-worth individuals, and family offices. The Bank of New York Mellon Corporation was founded in 1784 and is headquartered in New York, New York.