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Evercore (EVR) Down 11.1% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Evercore (EVR). Shares have lost about 11.1% in that time frame, underperforming the S&P 500.

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

Evercore Q2 Earnings Beat Estimates on Higher Revenues

Evercore delivered a positive earnings surprise of 17.6% in second-quarter 2019. Adjusted earnings per share of $2.07 surpassed the Zacks Consensus Estimate of $1.76. Further, the figure came in significantly higher than the prior-year quarter’s earnings of $1.65 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 $81.7 million or $1.88 per share compared with $68.9 million or $1.52 per share in the year-ago quarter.

Revenues Increase, Expenses Rise

Net revenues increased 18% year over year to $535.8 million in the reported quarter. This upside resulted from hike in advisory fees (up 22%) and higher other revenues. On a GAAP basis, net revenues were $531 million, up 18%.

Total expenses flared up 18% to $385.4 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 57.8% in the year-earlier quarter’s figure.

Adjusted operating margin came in at 25.8% compared with the prior-year quarter’s 25.5%.

Quarterly Segment Performance (Adjusted)

Investment Banking: Net revenues jumped 18% year over year to $518.9 million. Also, operating income increased 20% to $133.5 million. Advisory client transactions were 225,000, up 4% year over year.

Investment Management: Net revenues were $16.9 million, up 13% from the comparable quarter last year. Operating income was $5 million compared with the $4.2 million recorded a year ago. Additionally, AUM of $10.1 million was reported in the second quarter, up 5%.  

Balance Sheet Position

As of Jun 30, 2019, cash, cash equivalents, marketable securities and certificates of deposit totaled $591.4 million. Moreover, current assets exceeded current liabilities by $651.6 million as of the same date.

Capital Deployment

During the June-end quarter, the company repurchased 1.3 million shares at an average cost of $84.30 and returned $133.5 million to shareholders, including dividends.

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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