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Evercore (EVR) Up 4.2% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

It has been about a month since the last earnings report for Evercore (EVR). Shares have added about 4.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Evercore due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Evercore Reports Decent Q3 Earnings

Evercore reported third-quarter 2019 adjusted earnings per share of $1.26, higher than the prior-year quarter’s $1.23 per share.

The quarterly results reflected higher revenues and rise in AUM. In addition, liquidity position was consistently strong. However, escalating expenses were a major drag.

Including certain one-time items, on a GAAP basis, net income available to common shareholders was $43.3 million or $1.01 per share compared with $49.5 million or $1.08 per share in the year-ago quarter.

Revenues Increase, Expenses Rise

Net revenues increased 6% year over year to $408.5 million in the reported quarter. This upside resulted from hike in advisory fees (up 5%). On a GAAP basis, net revenues were $402.2 million, up 5%.

Total expenses flared up 8.3% to $323.7 million from the prior-year quarter. This upswing stemmed from rise in employee compensation and benefits expenses, along with elevated non-compensation costs.

Adjusted compensation ratio was 58%, up from the year-earlier quarter’s 57.5%.

Adjusted operating margin came in at 20.8% compared with the prior-year quarter’s 22.6%.

Quarterly Segment Performance (Adjusted)

Investment Banking: Net revenues jumped 6% year over year to $392.1 million. Yet, operating income edged down 1% to $80.4 million. Advisory client transactions were 213,000, up 9% year over year.

Investment Management: Net revenues were $16.5 million, down 2% from the last year’s comparable quarter. Operating income was $4.4 million compared with the $5.7 million recorded a year ago. Additionally, AUM of $10.3 million was reported in the third quarter, up 4%.  

Balance-Sheet Position

As of Sep 30, 2019, cash, cash equivalents, marketable securities and certificates of deposit totaled $620.1 million. Moreover, current assets exceeded current liabilities by $894.4 million as of the same date.

Capital Deployment

During the September-end quarter, the company repurchased 0.5 million shares at an average cost of $78.87 per share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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