HLNE

We rate Hamilton Lane INC (HLNE) as a Reduce with a composite score of 43.3/100 at a current price of $104.50. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (74th percentile) and value (58th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (19th percentile) and stability (23th percentile) tempers our overall conviction. We assign a Narrow Moat rating (55/100), High uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Hamilton Lane INC holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 43.3/100 places it at rank #3067 in our full 7,333-stock universe. At $7.3B in market capitalization, Hamilton Lane INC is a mid-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 32%, though momentum at the 19th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 60% (-16.8pp vs sector) narrow to operating margins of 43% (+26.4pp vs sector) and net margins of 47.7%, yielding a gross-to-net conversion rate of 80%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $104.50, Hamilton Lane INC is trading near fair value based on current fundamentals. Our value factor score of 58/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 13.4x (roughly in line with the sector median of 11.9x), EV/EBITDA of 15.7x (at a premium), P/B of 3.5x, P/S of 6.4x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to Hamilton Lane INC. Key risk factors include elevated market sensitivity (beta of 1.46), below-average price stability (23th percentile). The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.46); below-average price stability (23th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 23th percentile and quality factor at the 74th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 60% provide a buffer against cost pressures; conservative leverage (21% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Hamilton Lane INC's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 26.5%, disciplined leverage (21% D/E), a 1.53% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Hamilton Lane INC meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 1.53% dividend yield, and the combination of 16.2% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Hamilton Lane INC receives a Reduce rating with a composite score of 43.3/100 (rank #3067 of 7,333). Our quantitative framework assigns a Narrow Moat (55/100, trend: stable), High uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 40/100.

Our analysis does not support a constructive view on Hamilton Lane INC at this time. The combination of the current quantitative profile, high uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.