Why Is Evercore (EVR) Up 1% Since Last Earnings Report?
It has been about a month since the last earnings report for Evercore (EVR). Shares have added about 1% 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 drivers.
Evercore Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Evercore reported adjusted earnings per share of $3.8 for first-quarter 2022, surpassing the Zacks Consensus Estimate of $3.1. Also, the bottom line was 15.5%, up from the prior-year quarter’s level of $3.29 per share.
Impressive revenue growth with support from higher advisory fees aided the results. 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 $158 million or $3.79 per share, up from $144.4 million or $3.25 per share reported in the year-ago quarter.
Revenues Climb, Expenses Flare Up
Total revenues increased 9% year over year to a record $727.1 million in the reported quarter. Also, the top line surpassed the consensus estimate of $673.6 million. A jump in advisory fees, as well in asset management and administration fees, led to the uptick. On an adjusted basis, net revenues came in at $728.3 million, up 8.7% year over year.
Total expenses rose 9.7% to $513.5 million from the prior-year quarter’s level. This was partly offset by a decrease in execution, clearing and custody fees.
Adjusted compensation ratio was 59%, flat compared with the year-earlier quarter.
Adjusted operating margin came in at 29.5%, down from the prior-year quarter’s 30.1%.
Quarterly Segmental Performance (Adjusted)
Investment Banking: Net revenues climbed 8.7% year over year to $708.9 million. Operating income increased 6.6% to $208.4 million. Underwriting fees of $36.3 million in the quarter dropped 54% from the prior-year period’s level.
Investment Management: Net revenues were $19.4 million, up 8.4% from the prior-year quarter’s reading. Operating income was $6.5 million, up 3.3% from the year-ago quarter’s tally. AUM of $11.6 billion was witnessed in the first quarter, up 9% from the year-ago quarter’s level.
Balance Sheet Position
As of Mar 31, 2022, cash and cash equivalents were $454.8 million, and investment securities and certificates of deposit were $1.1 billion. Current assets exceeded current liabilities by $1.4 billion as of the same date.
Capital Deployment Activities
Earlier in February, the board approved share repurchse authorization of up to the lesser of $1.4 billion or 10 million shares and/or LP units. Evercore returned capital worth $298 million to its shareholders during the quarter through dividends and repurchases of two million shares at an average price of $128.14.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -6.59% due to these changes.
VGM Scores
Currently, Evercore has a subpar Growth Score of D, however its Momentum Score is doing a lot better 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward 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.
Performance of an Industry Player
Evercore belongs to the Zacks Financial - Investment Bank industry. Another stock from the same industry, Goldman Sachs (GS), has gained 1.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Goldman reported revenues of $12.93 billion in the last reported quarter, representing a year-over-year change of -27%. EPS of $10.76 for the same period compares with $18.60 a year ago.
Goldman is expected to post earnings of $8.38 per share for the current quarter, representing a year-over-year change of -44.2%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.1%.
Goldman has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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