As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the investment banking & brokerage industry, including Houlihan Lokey (NYSE: HLI) and its peers.
Investment banks and brokerages facilitate capital raises, mergers and acquisitions, and securities trading. The sector benefits from corporate activity during economic expansion, increased retail trading participation, and advisory opportunities in emerging sectors. Headwinds include economic cycle vulnerability affecting deal flow, compressed trading commissions due to electronic platforms, and regulatory capital requirements constraining certain higher-risk activities.
The 16 investment banking & brokerage stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.2% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.
Houlihan Lokey (NYSE: HLI)
Founded in 1972 and known for its expertise in complex financial situations, Houlihan Lokey (NYSE: HLI) is a global investment bank specializing in mergers and acquisitions, capital markets, financial restructurings, and valuation advisory services.
Houlihan Lokey reported revenues of $659.5 million, up 14.7% year on year. This print exceeded analysts’ expectations by 1%. Overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ Financial Restructuring segment estimates.
“Our results for the quarter reflect our strong business model and improving market conditions. We enter the second half of the year with optimism for continued momentum,” stated Scott Adelson, Chief Executive Officer of Houlihan Lokey.
The stock is down 11.2% since reporting and currently trades at $177.57.
Best Q3: PJT (NYSE: PJT)
Spun off from Blackstone in 2015 and founded by former Morgan Stanley executive Paul J. Taubman, PJT Partners (NYSE: PJT) is an advisory-focused investment bank that provides strategic advice, restructuring services, and fundraising solutions to corporations, boards, and investment firms.
PJT reported revenues of $447.1 million, up 37% year on year, outperforming analysts’ expectations by 15.6%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.
PJT achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 2.1% since reporting. It currently trades at $165.98.
Is now the time to buy PJT? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Perella Weinberg (NASDAQ: PWP)
Founded in 2006 by veteran investment bankers Joseph Perella and Peter Weinberg during a wave of boutique advisory firm launches, Perella Weinberg Partners (NASDAQ: PWP) is a global independent advisory firm that provides strategic and financial advice to corporations, financial sponsors, and government institutions.
Perella Weinberg reported revenues of $164.6 million, down 40.8% year on year, falling short of analysts’ expectations by 8.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and EPS estimates.
Perella Weinberg delivered the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is flat since the results and currently trades at $18.72.
Read our full analysis of Perella Weinberg’s results here.
LPL Financial (NASDAQ: LPLA)
As the nation's largest independent broker-dealer with no proprietary products of its own, LPL Financial (NASDAQ: LPLA) provides technology, compliance, and business support services to independent financial advisors and institutions who manage investments for retail clients.
LPL Financial reported revenues of $4.55 billion, up 48.4% year on year. This number topped analysts’ expectations by 5%. Overall, it was an exceptional quarter as it also put up a solid beat of analysts’ EBITDA estimates.
LPL Financial scored the fastest revenue growth among its peers. The stock is up 9.6% since reporting and currently trades at $372.40.
Read our full, actionable report on LPL Financial here, it’s free for active Edge members.
Moelis (NYSE: MC)
Founded in 2007 by veteran banker Ken Moelis during the lead-up to the financial crisis, Moelis & Company (NYSE: MC) is an independent investment bank that provides strategic and financial advisory services to corporations, financial sponsors, governments, and sovereign wealth funds.
Moelis reported revenues of $376 million, up 33.9% year on year. This print came in 3.2% below analysts' expectations. Aside from that, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a significant miss of analysts’ EBITDA estimates.
The stock is down 3.9% since reporting and currently trades at $64.25.
Read our full, actionable report on Moelis here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.
