Over the past six months, Hamilton Lane’s stock price fell to $134.79. Shareholders have lost 11.3% of their capital, which is disappointing considering the S&P 500 has climbed by 18.8%. This might have investors contemplating their next move.
Following the pullback, is now an opportune time to buy HLNE? Find out in our full research report, it’s free.
Why Is HLNE a Good Business?
With over $100 billion in assets under management and supervision, Hamilton Lane (NASDAQ: HLNE) is an investment management firm that specializes in private markets, offering advisory services and fund solutions to institutional and private wealth investors.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
Thankfully, Hamilton Lane’s 21.1% annualized revenue growth over the last five years was excellent. Its growth surpassed the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Hamilton Lane’s EPS grew at a remarkable 18.3% compounded annual growth rate over the last five years. This performance was better than most financials businesses.
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.
Over the last five years, Hamilton Lane has averaged an ROE of 38.5%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Hamilton Lane has a strong competitive moat.
Final Judgment
These are just a few reasons why we think Hamilton Lane is an elite financials company. After the recent drawdown, the stock trades at 28.2× forward P/E (or $134.79 per share). Is now the time to initiate a position? See for yourself in our full research report, it’s free.
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