Is Hamilton Lane Fairly Priced After Recent Fundraising Momentum And Share Price Rebound?

• If you have been wondering whether Hamilton Lane is still a smart buy after its big run in alternative assets, you are not alone. This article is going to dig into what the current share price really implies about future returns.
• The stock has bounced recently, rising about 5.2% over the last week and 15.3% over the past month. It is still down around 7.0% year to date and roughly 6.5% over the last 12 months, which hints at shifting sentiment rather than a straight line growth story.
• Investors have been reacting to a steady drumbeat of updates around fundraising momentum, new separately managed account mandates, and Hamilton Lane's continued expansion of its private markets platform, including new partnerships with institutional clients and launches of retail focused vehicles. These headlines help explain why the stock can rebound strongly in the short term, even while the longer term return picture remains more mixed.
• Despite the recent moves, Hamilton Lane only scores a 1 out of 6 on our valuation checks. We will walk through what different valuation approaches are saying about the stock now, and then finish by looking at a more holistic way to think about what it is really worth.

Hamilton Lane scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Hamilton Lane Excess Returns Analysis

The Excess Returns model looks at how much profit Hamilton Lane generates above the return that shareholders require, and then capitalises those extra profits into an intrinsic value per share.

Starting from a Book Value of $18.78 per share and a Stable EPS of $7.91 per share, the company is assumed to keep earning a strong Average Return on Equity of 29.64%. After deducting a Cost of Equity of $2.18 per share, this leaves an Excess Return of $5.72 per share, which is effectively the value created on top of shareholders’ minimum required return.

Using a Stable Book Value of $26.68 per share, based on weighted future book value estimates from two analysts, the model projects Hamilton Lane can sustain these attractive excess returns over time. That stream of excess profits translates into an estimated intrinsic value of about $143 per share.

With the Excess Returns valuation implying the stock is roughly 3.0% undervalued versus the current share price, Hamilton Lane appears close to fairly priced with a mild upside skew.

Result: ABOUT RIGHT

Hamilton Lane is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hamilton Lane.

Approach 2: Hamilton Lane Price vs Earnings

The price to earnings ratio is a useful yardstick for profitable asset managers like Hamilton Lane because it links what investors pay per share directly to the earnings power that ultimately drives returns. In general, faster and more resilient earnings growth, combined with lower perceived risk, justifies a higher PE multiple, while slower growth or higher volatility argues for a lower one.

Hamilton Lane currently trades on a PE of about 26.7x, which is roughly in line with the Capital Markets industry average of around 25.7x, but notably above the broader peer group average of about 13.5x. Simply Wall St also uses a proprietary Fair Ratio framework, which estimates what PE multiple would be reasonable after adjusting for the company’s growth outlook, profitability, risk profile, industry positioning and market capitalization. This approach is more informative than a simple peer or sector comparison because it explicitly ties the multiple to Hamilton Lane’s specific fundamentals rather than assuming it should look like a typical capital markets firm.

On this basis, Hamilton Lane’s actual PE comes out close to its Fair Ratio estimate, suggesting the market is pricing the shares broadly in line with their risk adjusted earnings profile.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Hamilton Lane Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company linked directly to your numbers, from your assumptions for Hamilton Lane’s future revenue, earnings and margins, through to your view of its fair value. On Simply Wall St’s Community page, used by millions of investors, Narratives make this process accessible by guiding you to connect what you believe about Hamilton Lane’s business, such as expanding evergreen funds or rising regulatory and competitive pressures, to a structured financial forecast and a resulting fair value you can compare against today’s price to decide whether it looks like a buy, hold, or sell. Because Narratives update dynamically as new news, earnings or guidance arrive, your fair value view evolves automatically with the story. One investor might have a more optimistic Hamilton Lane Narrative with higher growth and a fair value well above the current price, while another may be more cautious, assume slower growth and margin pressure, and arrive at a fair value closer to or even below where the stock trades today.

Do you think there's more to the story for Hamilton Lane? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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