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Bear of the Day

Houlihan Lokey (HLI - Free Report) posted back to back misses of the Zacks Consensus Estimate. That alone will not make a stock the Bear of the Day, so let's figure out why the stock is now a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

The Numbers

HLI missed the Zacks Consensus Estimate of $0.45 by $0.02 for a 4.4% negative earnings surprise in the most recent quarter.

Description

Houlihan Lokey is an independent investment bank with focus on mergers and acquisitions, financings, financial restructurings and financial advisory services.

Earnings History

Usually when a stock is the Bear of the Day, the earnings history is filled with misses. This is also the case for HLI, as there are two misses in the only three quarters that have been reported.

Estimates

Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen steadily over the last few months. The FY16 estimate stood at $1.84 in April but fell to $1.75 in May and has remained there throughout the month of June.

Next year has not seen any movement in the estimate that started as $2.02 in September of last year.

Chart

Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #5 (Strong Sell) we see that estimates are moving higher.

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Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.

Brian also runs the brand new Zacks Game Changers where he looks for stocks that are disrupting their industries and reaping big gains.

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