Head-To-Head Survey: Houlihan Lokey (NYSE:HLI) & Atlanticus (NASDAQ:ATLC)

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

Volatility & Risk

Atlanticus has a beta of 1.94, suggesting that its stock price is 94% more volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Atlanticus and Houlihan Lokey, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlanticus	0	2	5	0	2.71
Houlihan Lokey	0	5	4	1	2.60

Atlanticus presently has a consensus target price of $90.00, suggesting a potential upside of 35.64%. Houlihan Lokey has a consensus target price of $207.43, suggesting a potential upside of 17.68%. Given Atlanticus’ stronger consensus rating and higher possible upside, research analysts clearly believe Atlanticus is more favorable than Houlihan Lokey.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlanticus	$1.31 billion	0.77	$111.30 million	$5.63	11.79
Houlihan Lokey	$2.39 billion	5.17	$399.71 million	$6.20	28.43

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

Insider & Institutional Ownership

14.2% of Atlanticus shares are owned by institutional investors. Comparatively, 78.1% of Houlihan Lokey shares are owned by institutional investors. 50.4% of Atlanticus shares are owned by company insiders. Comparatively, 22.8% of Houlihan Lokey shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Atlanticus	7.46%	22.86%	2.86%
Houlihan Lokey	16.62%	24.17%	14.37%

Summary

Houlihan Lokey beats Atlanticus on 10 of the 15 factors compared between the two stocks.

About Atlanticus

Atlanticus Holdings Corporation, a financial technology company, provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance. The Credit as a Service segment originates a range of consumer loan products, such as private label and general purpose credit cards originated by lenders through various channels, including retail and healthcare, direct mail solicitation, digital marketing, and partnerships with third parties; and offers credit to their customers for the purchase of various goods and services, including consumer electronics, furniture, elective medical procedures, healthcare, and home-improvements by partnering with retailers, healthcare providers, and other service providers. This segment also offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms. The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products. It also invests in and services portfolios of credit card receivables. The company was founded in 1996 and is headquartered in Atlanta, Georgia.

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.