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Evercore (EVR) Q2 Earnings Beat Estimates, Stock Down 3.9%
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Evercore (EVR - Free Report) reported second-quarter 2020 adjusted earnings per share of $1.53, beating the Zacks Consensus Estimate of $1.27. However, results were down 26.1% from the prior-year quarter’s $2.07 per share.
The quarterly results reflect a solid liquidity position and an increase in assets under management (AUM). However, decline in revenues and escalating expenses are major concerns. The company’s shares declined 3.9% following the release most likely due to these concerns.
Including certain one-time items, on a GAAP basis, net income available to common shareholders was $56.4 million or $1.35 cents per share compared with the $81.7 million or $1.88 per share witnessed in the year-ago quarter.
Revenues Fall, Expenses Rise
Net revenues decreased 4% year over year to $513.9 million in the reported quarter. This downside resulted from a fall in advisory fees (down 24%), partially offset by strong commissions and trades (up 11%). However, the revenue figure surpassed the Zacks Consensus Estimate of $456.6 million. On a GAAP basis, net revenues came in at $507.1 million, down 5%.
Total expenses went up 4% to $408.6 million from the prior-year quarter. This upswing mainly stemmed from rise in employee compensation and benefits expenses.
Adjusted compensation ratio was 65%, up from the year-earlier quarter’s 58%.
Adjusted operating margin came in at 20% compared with the prior-year quarter’s 25.8%.
Quarterly Segment Performance (Adjusted)
Investment Banking: Net revenues dropped 4% year over year to $500 million. Moreover, operating income slid 25% to $100.5 million. Advisory client transactions were 222,000, down 1% year over year.
Investment Management: Net revenues were $13.9 million, down 17% from the prior year’s comparable quarter. Operating income came in at $2.2 million, plummeting 55% year over year. Additionally, an AUM of $10.4 million was reported in the second quarter, up 3% year over year.
Balance-Sheet Position
As of Jun 30, 2020, cash, cash equivalents and marketable securities totaled $1.1 billion. Moreover, current assets exceeded current liabilities by $951.1 million as of the same date.
Capital Deployment
During the June-end quarter, the company repurchased 4,000 shares at an average cost of $58.28 per share.
Our Viewpoint
Evercore displayed an impressive performance during the April-June period. The company’s initiatives to fortify its investment banking segment bode well. Also, it is well poised to undertake any opportunistic expansion given its sound liquidity position. Nevertheless, escalating expenses are a concern.
Earnings Schedule and Performance of Other Investment Banks
Charles Schwab’s (SCHW - Free Report) second-quarter 2020 adjusted earnings of 54 cents per share lagged the Zacks Consensus Estimate of 55 cents. Also, the bottom line decreased 19% from the prior-year quarter. Results for the reported quarter excluded acquisition and integration-related costs as well as the amortization of acquired intangibles.
Interactive Brokers Group (IBKR - Free Report) delivered adjusted earnings per share of 57 cents, beating the Zacks Consensus Estimate of 30 cents in the second quarter. The reported figure was flat, year on year.
Among others, Raymond James (RJF - Free Report) is scheduled to release quarterly results on Jul 29.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
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Evercore (EVR) Q2 Earnings Beat Estimates, Stock Down 3.9%
Evercore (EVR - Free Report) reported second-quarter 2020 adjusted earnings per share of $1.53, beating the Zacks Consensus Estimate of $1.27. However, results were down 26.1% from the prior-year quarter’s $2.07 per share.
The quarterly results reflect a solid liquidity position and an increase in assets under management (AUM). However, decline in revenues and escalating expenses are major concerns. The company’s shares declined 3.9% following the release most likely due to these concerns.
Including certain one-time items, on a GAAP basis, net income available to common shareholders was $56.4 million or $1.35 cents per share compared with the $81.7 million or $1.88 per share witnessed in the year-ago quarter.
Revenues Fall, Expenses Rise
Net revenues decreased 4% year over year to $513.9 million in the reported quarter. This downside resulted from a fall in advisory fees (down 24%), partially offset by strong commissions and trades (up 11%). However, the revenue figure surpassed the Zacks Consensus Estimate of $456.6 million. On a GAAP basis, net revenues came in at $507.1 million, down 5%.
Total expenses went up 4% to $408.6 million from the prior-year quarter. This upswing mainly stemmed from rise in employee compensation and benefits expenses.
Adjusted compensation ratio was 65%, up from the year-earlier quarter’s 58%.
Adjusted operating margin came in at 20% compared with the prior-year quarter’s 25.8%.
Quarterly Segment Performance (Adjusted)
Investment Banking: Net revenues dropped 4% year over year to $500 million. Moreover, operating income slid 25% to $100.5 million. Advisory client transactions were 222,000, down 1% year over year.
Investment Management: Net revenues were $13.9 million, down 17% from the prior year’s comparable quarter. Operating income came in at $2.2 million, plummeting 55% year over year. Additionally, an AUM of $10.4 million was reported in the second quarter, up 3% year over year.
Balance-Sheet Position
As of Jun 30, 2020, cash, cash equivalents and marketable securities totaled $1.1 billion. Moreover, current assets exceeded current liabilities by $951.1 million as of the same date.
Capital Deployment
During the June-end quarter, the company repurchased 4,000 shares at an average cost of $58.28 per share.
Our Viewpoint
Evercore displayed an impressive performance during the April-June period. The company’s initiatives to fortify its investment banking segment bode well. Also, it is 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-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.
Earnings Schedule and Performance of Other Investment Banks
Charles Schwab’s (SCHW - Free Report) second-quarter 2020 adjusted earnings of 54 cents per share lagged the Zacks Consensus Estimate of 55 cents. Also, the bottom line decreased 19% from the prior-year quarter. Results for the reported quarter excluded acquisition and integration-related costs as well as the amortization of acquired intangibles.
Interactive Brokers Group (IBKR - Free Report) delivered adjusted earnings per share of 57 cents, beating the Zacks Consensus Estimate of 30 cents in the second quarter. The reported figure was flat, year on year.
Among others, Raymond James (RJF - Free Report) is scheduled to release quarterly results on Jul 29.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>