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Evercore (EVR) Up 6% on Q3 Earnings Beat, Expense Decline
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Evercore Inc.’s (EVR - Free Report) shares gained 6% since the release of the company’s third-quarter 2022 results, likely reflecting investors' optimism over better-than-expected results. EVR reported adjusted earnings per share of $2.20 in third-quarter 2022, surpassing the Zacks Consensus Estimate of $1.35. However, the bottom line was 44% down from the prior-year quarter.
While the decline in the net revenues of the Investment Banking and Investment Management segments affected the overall top line, a decline in expenses alleviated the bottom-line pressure. Amid a challenging environment, the company saw a decline in assets under management (AUM).
On a GAAP basis, net income available to common shareholders was $82.4 million or $2.03 per share, down from $159.5 million or $3.74 per share in the year-ago quarter.
Revenues Decline, Expenses Fall
Net revenues decreased 30% year over year to $576.9 million in the reported quarter. Nonetheless, the top line surpassed the consensus estimate of $462 million. The decline was mainly due to a decrease in all revenue components other than commissions and related revenues.
Total expenses decreased 22.8% to $446.5 million from the prior-year quarter.
The adjusted compensation ratio was 61%, up from the prior-year period’s 58.5%.
The adjusted operating margin was 23.4%, down from the prior-year quarter’s 31.5%.
Quarterly Segmental Performance
Investment Banking: Net revenues declined 30.5% year over year to $560.5 million. Operating income decreased 49.4% to $126.9 million.
Investment Management: Net revenues were $16.4 million, down 1.3% from the prior-year quarter. Operating income was $3.48 million against an operating loss of $5.48 million from the year-ago quarter’s tally. AUM was $9.98 billion as of the third-quarter end, down 12% from the year-ago quarter.
Balance Sheet Position
As of Sep 30, 2022, cash and cash equivalents were $473.1 million, and investment securities and certificates of deposit were $1.3 billion. Current assets exceeded current liabilities by $1.5 billion as of the same date.
Capital Deployment Activities
In the third quarter of 2022, 0.3 million shares were repurchased by the company at an average price of $98.71 per share.
Further, Evercore returned capital worth $565.3 million to its shareholders in the first nine months of 2022 through dividends and repurchases of 3.9 million shares at an average price of $118.28 per share.
Our Viewpoint
Evercore’s financial performance in the third quarter seems disappointing. Nonetheless, amid the unfavorable macro-economic backdrop for deal-making, its initiatives to boost its client base in advisory solutions and expand geographically are strategic moves.
Also, with strong liquidity, the company’s efforts to enhance shareholders’ value through steady capital deployment activities seem sustainable.
Charles Schwab’s (SCHW - Free Report) third-quarter 2022 adjusted earnings of $1.10 per share handily beat the Zacks Consensus Estimate of $1.05. The bottom line rose 31% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting the trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds in the quarter. However, higher expenses were headwinds for SCHW.
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2022 adjusted earnings per share of $1.08 handily surpassed the Zacks Consensus Estimate of 99 cents. The bottom line reflects a rise of 38.5% from the prior-year quarter.
Results were primarily aided by an improvement in revenues. Also, the capital position remained strong. However, higher expenses and a fall in daily average revenue trades were headwinds for IBKR.
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Evercore (EVR) Up 6% on Q3 Earnings Beat, Expense Decline
Evercore Inc.’s (EVR - Free Report) shares gained 6% since the release of the company’s third-quarter 2022 results, likely reflecting investors' optimism over better-than-expected results. EVR reported adjusted earnings per share of $2.20 in third-quarter 2022, surpassing the Zacks Consensus Estimate of $1.35. However, the bottom line was 44% down from the prior-year quarter.
While the decline in the net revenues of the Investment Banking and Investment Management segments affected the overall top line, a decline in expenses alleviated the bottom-line pressure. Amid a challenging environment, the company saw a decline in assets under management (AUM).
On a GAAP basis, net income available to common shareholders was $82.4 million or $2.03 per share, down from $159.5 million or $3.74 per share in the year-ago quarter.
Revenues Decline, Expenses Fall
Net revenues decreased 30% year over year to $576.9 million in the reported quarter. Nonetheless, the top line surpassed the consensus estimate of $462 million. The decline was mainly due to a decrease in all revenue components other than commissions and related revenues.
Total expenses decreased 22.8% to $446.5 million from the prior-year quarter.
The adjusted compensation ratio was 61%, up from the prior-year period’s 58.5%.
The adjusted operating margin was 23.4%, down from the prior-year quarter’s 31.5%.
Quarterly Segmental Performance
Investment Banking: Net revenues declined 30.5% year over year to $560.5 million. Operating income decreased 49.4% to $126.9 million.
Investment Management: Net revenues were $16.4 million, down 1.3% from the prior-year quarter. Operating income was $3.48 million against an operating loss of $5.48 million from the year-ago quarter’s tally. AUM was $9.98 billion as of the third-quarter end, down 12% from the year-ago quarter.
Balance Sheet Position
As of Sep 30, 2022, cash and cash equivalents were $473.1 million, and investment securities and certificates of deposit were $1.3 billion. Current assets exceeded current liabilities by $1.5 billion as of the same date.
Capital Deployment Activities
In the third quarter of 2022, 0.3 million shares were repurchased by the company at an average price of $98.71 per share.
Further, Evercore returned capital worth $565.3 million to its shareholders in the first nine months of 2022 through dividends and repurchases of 3.9 million shares at an average price of $118.28 per share.
Our Viewpoint
Evercore’s financial performance in the third quarter seems disappointing. Nonetheless, amid the unfavorable macro-economic backdrop for deal-making, its initiatives to boost its client base in advisory solutions and expand geographically are strategic moves.
Also, with strong liquidity, the company’s efforts to enhance shareholders’ value through steady capital deployment activities seem sustainable.
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.
Peer Performance
Charles Schwab’s (SCHW - Free Report) third-quarter 2022 adjusted earnings of $1.10 per share handily beat the Zacks Consensus Estimate of $1.05. The bottom line rose 31% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility hurting the trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds in the quarter. However, higher expenses were headwinds for SCHW.
Interactive Brokers Group’s (IBKR - Free Report) third-quarter 2022 adjusted earnings per share of $1.08 handily surpassed the Zacks Consensus Estimate of 99 cents. The bottom line reflects a rise of 38.5% from the prior-year quarter.
Results were primarily aided by an improvement in revenues. Also, the capital position remained strong. However, higher expenses and a fall in daily average revenue trades were headwinds for IBKR.