Evercore (EVR) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Evercore EVR 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 assets under management (AUM) was a tailwind. In addition, Evercore’s liquidity position was consistently strong. However, escalating expenses were a major drag.
After considering certain one-time items, on a GAAP basis, net income available to common shareholders was $2995.9 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
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.
On Feb 1, 2022, Evercoreannounced a quarterly cash dividend of 68 cents per share. The dividend will be paid out on Mar 11, 2022, to its stockholders of record as of Feb 25, 2022.
Our Viewpoint
Evercore displayed an impressive performance during the fourth quarter. Its top-line strength reflects earnings stability. This apart, EVR’s strategic initiatives to bolster its investment banking segment bode well. Though its escalating expenses are a concern, EVR is well poised to undertake any opportunistic expansion, given its sound liquidity position.
Evercore Inc Price, Consensus and EPS Surprise
Evercore Inc price-consensus-eps-surprise-chart | Evercore Inc Quote
Currently, Evercore has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Performance of Other Banks
First Republic Bank’s FRC fourth-quarter 2021 earnings per share of $2.02 surpassed the Zacks Consensus Estimate of $1.91. Additionally, the bottom line improved 26.3% from the year-ago quarter’s level.
FRC’s quarterly results were supported by a higher net interest income and non-interest income. Moreover, First Republic’s balance-sheet position was strong in the quarter. However, higher expenses and elevated net loan charge-offs were the offsetting factors.
Citigroup Inc. C delivered an earnings surprise of 5.04% in fourth-quarter 2021. Income from continuing operations per share of $1.46 outpaced the Zacks Consensus Estimate of $1.39. However, the reported figure declined 24% from the prior-year quarter’s level.
Citigroup’s investment banking revenues jumped in the quarter under review, driven by equity underwriting and higher advisory revenues. However, fixed-income revenues were down due to declining rates and spread products.
U.S. Bancorp USB reported fourth-quarter 2021 earnings per share of $1.07, which missed the Zacks Consensus Estimate of $1.11. Results, however, compare favorably with the prior-year quarter’s figure of 95 cents.
Though lower revenues and escalating expenses were disappointing factors, credit quality was a tailwind. Growth in loan and deposit balance, and a strong capital position were also encouraging factors. Moreover, U.S. Bancorp closed the acquisition of San Francisco-based fintech firm TravelBank, which offers technology-driven cost and travel management solutions.
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