Over the last six months, Hamilton Lane’s shares have sunk to $118.04, producing a disappointing 10.2% loss - a stark contrast to the S&P 500’s 29.3% gain. This may have investors wondering how to approach the situation.
Following the drawdown, is this a buying opportunity for HLNE? Find out in our full research report, it’s free for active Edge members.
Why Are We Positive On Hamilton Lane?
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
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years.
Thankfully, Hamilton Lane’s 21.1% annualized revenue growth over the last five years was excellent. Its growth beat the average financials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Hamilton Lane’s EPS grew at a remarkable 17.1% 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. With the recent decline, the stock trades at 25.4× forward P/E (or $118.04 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .
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