Is Hamilton Lane (HLNE) Starting To Look Attractive After A 34% One-Year Share Price Slide?

• Wondering if Hamilton Lane at around US$97.53 is starting to look interesting on value, or if the market is still pricing in too much optimism.
• The stock is down 3.4% over the past week, 4.1% over the past month and has fallen 28.6% year to date and 34.2% over the last year, even though the 3 year and 5 year returns sit at 43.7% and 16.9% respectively.
• Recent headlines have focused on Hamilton Lane's role in private markets and its position in the broader capital markets space. This helps explain why sentiment around the stock can shift quickly and provides useful context when considering whether past gains and recent pullbacks still line up with the fundamentals.
• Right now, Hamilton Lane scores a 4/6 valuation check score. Next up is a close look at how different valuation methods stack up for this stock, followed by an even more complete way to think about its value beyond any single model.

Find out why Hamilton Lane's -34.2% return over the last year is lagging behind its peers.

Approach 1: Hamilton Lane Excess Returns Analysis

The Excess Returns model looks at how much profit a company generates above the return that shareholders could reasonably expect, given the risk they are taking. Instead of focusing on raw earnings, it compares the cost of equity to the earnings power supported by the balance sheet.

For Hamilton Lane, the model works off a Book Value of $19.96 per share and a Stable EPS of $9.27 per share, based on the median return on equity from the past 5 years. The implied Cost of Equity is $2.17 per share, which leaves an Excess Return of $7.10 per share. That excess is supported by an Average Return on Equity of 33.64% and a Stable Book Value estimate of $27.56 per share from 2 analysts.

Putting those assumptions together, the Excess Returns model arrives at an intrinsic value of about $186.50 per share, which suggests a 47.7% discount to the current price of around $97.53. On this measure, Hamilton Lane appears materially undervalued according to this model.

Result: UNDERVALUED (MODEL-BASED)

Our Excess Returns analysis suggests Hamilton Lane is undervalued by 47.7%. Track this in your watchlist or portfolio, or discover 61 more high quality undervalued stocks.

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

For profitable companies like Hamilton Lane, the P/E ratio is a straightforward way to relate what you pay per share to the earnings that each share generates. It helps you see how many dollars the market is currently willing to pay for a dollar of earnings.

What counts as a "fair" P/E typically reflects how the market views a company’s growth potential and risk profile. Faster growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually points to a lower one.

Hamilton Lane currently trades on a P/E of 18.35x. That sits below the Capital Markets industry average P/E of 30.19x and above the peer group average of 11.72x. Simply Wall St’s Fair Ratio for Hamilton Lane is 18.39x, which is a proprietary estimate of what the P/E might be given factors such as earnings growth, industry, profit margins, market cap and risk characteristics.

Because the Fair Ratio is tailored to Hamilton Lane’s own profile, it can be more informative than broad peer or industry comparisons. The current P/E of 18.35x is very close to the Fair Ratio of 18.39x, so on this measure the stock looks about in line with what would be expected.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Hamilton Lane Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so meet Narratives, a simple way for you to attach a clear story about Hamilton Lane to the numbers in a forecast and then see what fair value that story implies.

A Narrative on Simply Wall St connects your view of the business, such as how Hamilton Lane’s Evergreen funds or tokenized credit partnerships might develop, to explicit assumptions for future revenue, earnings and margins, which then flow through to an estimated fair value per share.

These Narratives sit inside the Community page on Simply Wall St, where millions of investors share different takes, and the platform continually refreshes each Narrative when fresh information such as news, earnings or new partnerships is added.

You can then compare the fair value from any Narrative to the current price to help decide whether the stock looks expensive or cheap on that story. For example, one Hamilton Lane Narrative might lean closer to the higher analyst fair value around US$227, while another might sit nearer the lower end around US$159. This can give you a clearer sense of which version of the future you find more convincing.

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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