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Evercore (EVR) Q2 Earnings Beat Estimates, Stock Rallies 3.19%

Zacks Equity Research

Following Evercore’s EVR second-quarter 2019 earnings release, shares of the company spiked 3.19%. The company delivered a positive earnings surprise of 17.6%. 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 assets under management (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.

Our Viewpoint

Evercore displayed an impressive performance during the April-June quarter. Its top-line strength displays earnings stability. This apart, the company’s strategic initiatives to bolster its investment banking segment bode well. Also, it remains well poised to undertake any opportunistic expansion given its sound liquidity position. Nevertheless, escalating expenses are a concern.
 

Evercore Inc Price, Consensus and EPS Surprise

Evercore Inc Price, Consensus and EPS Surprise

Evercore Inc price-consensus-eps-surprise-chart | Evercore Inc Quote

Currently, Evercore carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

Despite a disappointing capital markets performance, Morgan Stanley’s MS second-quarter 2019 earnings of $1.23 per share outpaced the Zacks Consensus Estimate of $1.13. However, the figure reflected a fall of 2% from adjusted earnings recorded in the year-ago quarter.

E*TRADE Financial ETFC delivered a positive earnings surprise of 1.8% in the second quarter. Adjusted earnings of $1.12 per share comfortably surpassed the Zacks Consensus Estimate of $1.10. Moreover, the results compared favorably with the prior-year quarter’s 95 cents.

Among others, Greenhill & Co., Inc. GHL will report quarterly numbers on Jul 31.

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