It has been about a month since the last earnings report for Evercore (EVR). Shares have added about 3.9% 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 Top Estimates on Fee Income Growth
Evercore reported first-quarter 2021 adjusted earnings per share of $3.29, which handily surpassed the Zacks Consensus Estimate of $2.63. Also, the bottom line was up from the prior-year quarter’s $1.21 per share.
Impressive revenue growth with support from higher underwriting and advisory fees supported the results. Also, rise in assets under management (AUM) was a tailwind. In addition, liquidity position was consistently strong. However, escalating expenses posed a major drag.
After considering certain one-time items, on a GAAP basis, net income available to common shareholders was $144.4 million or $3.25 per share compared with the $31.2 million or 74 cents per share reported in the year-ago quarter.
Revenues Climb, Expenses Flare Up
Net revenues increased 55.1% year over year to $662.3 million in the reported quarter. Jump in underwriting fees and advisory fees led to rise. The figure surpassed the Zacks Consensus Estimate of $541.4 million. On an adjusted basis, net revenues were $669.9 million, up 54%.
Total expenses flared up 23.9% to $468.1 million from the prior-year quarter. This upswing mainly stemmed from rise in employee compensation and benefits, along with professional expenses, partly offset by lower travel and related costs.
Adjusted compensation ratio was 59%, down from the year-earlier quarter’s 62%.
Adjusted operating margin came in at 30.1% compared with the prior-year quarter’s 19%.
Quarterly Segment Performance (Adjusted)
Investment Banking: Net revenues increased 56% year over year to $652 million. Also, operating income rose considerably to $195.5 million. Advisory client transactions were 248,000, up 12%. Notably, underwriting revenues of $79.3 million in the quarter more than doubled from the prior-year period.
Investment Management: Net revenues were $17.9 million, up 12% from the prior-year quarter. Operating income was $6.3 million, up from $3.3 million in year-ago quarter. Additionally, AUM of $10.6 million was reported in the first quarter, up 11%.
As of Mar 31, 2021, cash and cash equivalents were $410.8 million and marketable and investment securities totaled $873.1 million. Moreover, current assets exceeded current liabilities by $1.2 billion as of the same date.
Capital Deployment Activities
The company returned $275.3 million to shareholders during the quarter through dividends and repurchases of 1.9 million shares at an average price of $121.03.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
Currently, Evercore has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Evercore has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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