Och-Ziff Capital Management Group (NYSE:OZM) and Houlihan Lokey (NYSE:HLI) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.
Risk & Volatility
Och-Ziff Capital Management Group has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Houlihan Lokey has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.
Och-Ziff Capital Management Group pays an annual dividend of $0.08 per share and has a dividend yield of 6.7%. Houlihan Lokey pays an annual dividend of $1.08 per share and has a dividend yield of 2.6%. Och-Ziff Capital Management Group pays out 15.7% of its earnings in the form of a dividend. Houlihan Lokey pays out 45.2% 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 2 consecutive years. Och-Ziff Capital Management Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of recent ratings for Och-Ziff Capital Management Group and Houlihan Lokey, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Och-Ziff Capital Management Group||0||1||1||0||2.50|
Och-Ziff Capital Management Group presently has a consensus price target of $4.50, suggesting a potential upside of 275.00%. Houlihan Lokey has a consensus price target of $54.17, suggesting a potential upside of 31.12%. Given Och-Ziff Capital Management Group’s higher possible upside, research analysts plainly believe Och-Ziff Capital Management Group is more favorable than Houlihan Lokey.
Earnings and Valuation
This table compares Och-Ziff Capital Management Group and Houlihan Lokey’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Och-Ziff Capital Management Group||$858.34 million||0.69||$21.07 million||$0.51||2.35|
|Houlihan Lokey||$963.36 million||2.83||$172.28 million||$2.39||17.28|
Houlihan Lokey has higher revenue and earnings than Och-Ziff Capital Management Group. Och-Ziff Capital Management Group is trading at a lower price-to-earnings ratio than Houlihan Lokey, indicating that it is currently the more affordable of the two stocks.
This table compares Och-Ziff Capital Management Group and Houlihan Lokey’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Och-Ziff Capital Management Group||0.44%||-341.23%||15.98%|
Institutional & Insider Ownership
15.9% of Och-Ziff Capital Management Group shares are held by institutional investors. Comparatively, 51.3% of Houlihan Lokey shares are held by institutional investors. 62.3% of Och-Ziff Capital Management Group shares are held by insiders. Comparatively, 80.5% of Houlihan Lokey shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Houlihan Lokey beats Och-Ziff Capital Management Group on 12 of the 17 factors compared between the two stocks.
About Och-Ziff Capital Management Group
Och-Ziff Capital Management Group LLC is a publicly owned hedge fund sponsor. The firm provides investment advisory services for its clients. It primarily caters to institutional investors which include pension funds, fund-of-funds, foundations and endowments, corporations and other institutions, private banks and family offices. The firm invests in equity and alternative markets across the world. It employs quantitative and qualitative analysis to make its investments. For its multi-strategy portfolios, the firm employs strategies like convertible and derivative arbitrage, corporate credit, long/short equity special situations, buyout investments, merger arbitrage, private investments, and structured credit. It also invests in real estate and traditional real estate assets including multifamily, office, hotel and retail, loans, portfolio acquisitions, loan pools, operating companies, structured debt products, public securities, and non-traditional real estate assets including gaming, distressed land and residential, cell towers, parking, golf, debt and senior housing. For private equity investments, it considers investments in a variety of special situations that seek to realize value through strategic sales or initial public offerings. The firm typically invests in the energy investments. It prefers to invest in United States. It also manages a buyout fund, Och-Ziff Energy Fund. Och-Ziff Capital Management Group LLC was founded in 1994 and is based New York City with additional offices in Houston, Texas, London, United Kingdom, Hong Kong, Tokyo, Japan, Bangalore, India, Singapore, and Beijing, China.
About Houlihan Lokey
Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), financing, financial restructuring, and financial advisory services worldwide. It operates in three segments: Corporate Finance, Financial Restructuring, and Financial Advisory Services. 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 financial sponsors on various transactions. It also provides financing solutions and capital-raising advisory services for publicly-held and multinational corporations, financial sponsors, and privately-held companies. 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 Advisory Services 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, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations; and other types of financial opinions in connection with other transactions. In addition, this segment offers dispute resolution and strategic consulting services. It serves corporations, financial sponsors, and government agencies. The company was founded in 1972 and is headquartered in Los Angeles, California.
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