Brookfield (NYSE:BN – Get Free Report) and Houlihan Lokey (NYSE:HLI – Get Free Report) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.
Profitability
This table compares Brookfield and Houlihan Lokey’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Brookfield | 1.85% | 3.93% | 1.22% |
| Houlihan Lokey | 16.10% | 20.20% | 11.71% |
Risk & Volatility
Brookfield has a beta of 1.56, suggesting that its stock price is 56% more volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.
Insider & Institutional Ownership
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Brookfield and Houlihan Lokey, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Brookfield | 0 | 2 | 10 | 1 | 2.92 |
| Houlihan Lokey | 1 | 3 | 7 | 0 | 2.55 |
Brookfield presently has a consensus price target of $57.40, suggesting a potential upside of 54.61%. Houlihan Lokey has a consensus price target of $161.38, suggesting a potential upside of 23.57%. Given Brookfield’s stronger consensus rating and higher possible upside, research analysts plainly believe Brookfield is more favorable than Houlihan Lokey.
Valuation & Earnings
This table compares Brookfield and Houlihan Lokey”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Brookfield | $75.10 billion | 1.21 | $1.31 billion | $0.55 | 67.50 |
| Houlihan Lokey | $2.52 billion | 3.57 | $425.70 million | $5.95 | 21.95 |
Brookfield has higher revenue and earnings than Houlihan Lokey. Houlihan Lokey is trading at a lower price-to-earnings ratio than Brookfield, indicating that it is currently the more affordable of the two stocks.
Dividends
Brookfield pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. Houlihan Lokey pays an annual dividend of $2.80 per share and has a dividend yield of 2.1%. Brookfield pays out 50.9% of its earnings in the form of a dividend. Houlihan Lokey pays out 47.1% 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. Brookfield has increased its dividend for 2 consecutive years and Houlihan Lokey has increased its dividend for 9 consecutive years. Houlihan Lokey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Houlihan Lokey beats Brookfield on 10 of the 18 factors compared between the two stocks.
About Brookfield
Brookfield Corporation is an alternative asset manager and REIT/Real Estate Investment Manager firm focuses on real estate, renewable power, infrastructure and venture capital and private equity assets. It manages a range of public and private investment products and services for institutional and retail clients. It typically makes investments in sizeable, premier assets across geographies and asset classes. It invests both its own capital as well as capital from other investors. Within private equity and venture capital, it focuses on acquisition, early ventures, control buyouts and financially distressed, buyouts and corporate carve-outs, recapitalizations, convertible, senior and mezzanine financings, operational and capital structure restructuring, strategic re-direction, turnaround, and under-performing midmarket companies. It invests in both public debt and equity markets. It invests in private equity sectors with focus on Business Services include infrastructure, healthcare, road fuel distribution and marketing, construction and real estate; Industrials include manufacturers of automotive batteries, graphite electrodes, returnable plastic packaging, and sanitation management and development; and Residential/ infrastructure services. It targets companies which likely possess underlying real assets, primarily in sectors such as industrial products, building materials, metals, mining, homebuilding, oil and gas, paper and packaging, manufacturing and forest product sectors. It invests globally with focus on North America including Brazil, the United States, Canada; Europe; and Australia; and Asia-Pacific. The firm considers equity investments in the range of $2 million to $500 million. It has a four-year investment period and a 10-year term with two one-year extensions. The firm prefers to take minority stake and majority stake. Brookfield Corporation was founded in 1997 and based in Toronto, Canada with additional offices across Northern America; South America; Europe; Middle East and Asia.
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.
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