Evercore (EVR) Down 3.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Evercore (EVR). Shares have lost about 3.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Evercore Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Evercore reported adjusted earnings per share of $7.15 for fourth-quarter 2021, surpassing the Zacks Consensus Estimate of $4.49. Also, the bottom line was 26.1% up from the prior-year quarter’s $5.67 per share.
Impressive revenue growth with support from higher commissions, and related revenues and advisory fees aided the results. Advisory revenues exceeded $2.7 billion for the first time in the firm's history. Also, a rise in AUM was a tailwind. In addition, Evercore’s liquidity position was consistently strong. However, escalating expenses were a major drag.
On a GAAP basis, net income available to common shareholders was $295.9 million or $6.96 per share compared with the $220.4 million or $5.02 reported in the year-ago quarter.
In 2021, adjusted earnings of $17.5 per share beat the consensus estimate of $13.4 and rose 82% year over year. Net income available to common shareholders of $843.2 million climbed 83.5% from the 2020 figure.
Revenues Climb, Expenses Flare Up
Fourth-quarter net revenues increased 20% year over year to a record $1.11 billion in the reported quarter. A jump in advisory fees, commissions and related revenues as well as asset management and administration fees led to the uptick. On an adjusted basis, net revenues came in at $1.12 billion, up 16%.
In 2021, net revenues climbed nearly 45% year over year to $3.29 billion. Also, the top line surpassed the consensus estimate of $2.94 billion.
Total expenses rose 9.8% to $659.7 million from the prior-year quarter’s level. This was offset partly by a decrease in occupancy and equipment retail as well as clearing and custody fees.
Adjusted compensation ratio was 49.7%, down from the year-earlier quarter’s 52.3%.
Adjusted operating margin came in at 41.3% compared with the prior-year quarter’s 38.8%.
Quarterly Segment Performance (Adjusted)
Investment Banking: Net revenues climbed 16% year over year to $1.12 billion. However, operating income decreased 52% to $255.6 million. Underwriting revenues of $65.1 million in the quarter dropped 32% from the prior-year period’s level.
Investment Management: Net revenues were $20.9 million, down marginally from the prior-year quarter’s reading. Operating income was $6.1 million, down 13% from the year-ago quarter’s tally. Nonetheless, AUM of $12.18 billion was reported in the fourth quarter, up 20% from the year-ago quarter’s level.
Balance-Sheet Position
As of Dec 31, 2021, cash and cash equivalents were $575.3 million, and investment securities and certificates of deposit were $1.8 billion. Moreover, current assets exceeded current liabilities by $1.6 billion as of the same date.
Capital-Deployment Activities
Evercore returned a record level of capital worth $852.3 million to its shareholders during the quarter through dividends and repurchases of 5.5 million shares at an average price of $132.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Evercore has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Evercore has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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