What Happened?

Shares of investment banking firm Houlihan Lokey (NYSE: HLI) fell 8.8% in the afternoon session after the company reported third-quarter 2025 results that surpassed Wall Street's forecasts for both revenue and earnings. The company delivered strong headline numbers, with revenue growing 14.7% year on year to $659.5 million and adjusted earnings per share of $1.84 beating consensus estimates by 9.3%. Despite these positive results, the stock's decline suggests investors may be focused on the company's future prospects. The outlook for the next twelve months indicates an expected full-year EPS growth of 5.4%, a figure that may have underwhelmed investors who had priced in higher expectations for the premium-valued stock. The market's negative reaction implies that the solid quarterly performance was not enough to outweigh concerns about a potential slowdown in future profit growth.

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What Is The Market Telling Us

Houlihan Lokey’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

Houlihan Lokey is up 6.9% since the beginning of the year, but at $183.50 per share, it is still trading 12.3% below its 52-week high of $209.19 from September 2025. Investors who bought $1,000 worth of Houlihan Lokey’s shares 5 years ago would now be looking at an investment worth $2,985.

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