Analyzing Houlihan Lokey (NYSE:HLI) and Primis Financial (NASDAQ:FRST)

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

Risk and Volatility

Houlihan Lokey has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, Primis Financial has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.

Earnings & Valuation

This table compares Houlihan Lokey and Primis Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Houlihan Lokey	$2.62 billion	3.94	$425.70 million	$6.22	23.77
Primis Financial	$127.79 million	2.67	$61.44 million	$2.12	6.51

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

Institutional and Insider Ownership

78.1% of Houlihan Lokey shares are held by institutional investors. Comparatively, 75.0% of Primis Financial shares are held by institutional investors. 22.8% of Houlihan Lokey shares are held by company insiders. Comparatively, 10.9% of Primis Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Houlihan Lokey pays an annual dividend of $2.40 per share and has a dividend yield of 1.6%. Primis Financial pays an annual dividend of $0.40 per share and has a dividend yield of 2.9%. Houlihan Lokey pays out 38.6% of its earnings in the form of a dividend. Primis Financial pays out 18.9% 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 raised its dividend for 9 consecutive years. Primis Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current recommendations for Houlihan Lokey and Primis Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Houlihan Lokey	0	4	5	0	2.56
Primis Financial	0	1	2	0	2.67

Houlihan Lokey presently has a consensus target price of $191.29, indicating a potential upside of 29.40%. Primis Financial has a consensus target price of $17.00, indicating a potential upside of 23.23%. Given Houlihan Lokey’s higher probable upside, analysts plainly believe Houlihan Lokey is more favorable than Primis Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Houlihan Lokey	16.26%	22.88%	13.33%
Primis Financial	19.71%	5.09%	0.51%

Summary

Houlihan Lokey beats Primis Financial on 13 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 Primis Financial

Primis Financial Corp. operates as the bank holding company for Primis Bank that provides a range of financial services to individuals and small and medium sized businesses in the United States. Its deposit products include checking, NOW, savings, and money market accounts, as well as certificates of deposits. The company also provides commercial business and real estate, construction, secured asset based, small business administration, mortgage warehouse lending products, as well as financing for medical, dental, and veterinary businesses; residential mortgage, trust mortgage, home equity lines of credit, secured and unsecured personal, and consumer loans, as well as life insurance premium financing and demand loans. It also offers cash management services comprising investment/sweep, zero balance, and controlled disbursement accounts; and wire transfer, employer/payroll processing, night depository, depository transfer, merchant, ACH origination, and remote deposit capture services. In addition, the company provides debit cards, ATM services, notary services, and mobile and online banking. It operates full-service branches in Virginia and Maryland. The company was formerly known as Southern National Bancorp of Virginia, Inc. and changed its name to Primis Financial Corp. Primis Financial Corp. was founded in 2004 and is based in McLean, Virginia.