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Evercore (EVR) Stock Gains 4% as Q4 Earnings Beat Estimates

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Evercore (EVR - Free Report) shares gained 4% in the afterhours trading session in response to better-than-expected fourth-quarter 2020 results. Adjusted earnings per share of $5.67 handily surpassed the Zacks Consensus Estimate of $2.29. Also, the bottom line was up from the prior-year quarter’s $2.72 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 was a major drag.

After considering certain one-time items, on a GAAP basis, net income available to common shareholders was $220.4 million or $5.02 per share compared with the $105.2 million or $2.48 per share reported in the year-ago quarter.

In 2020, adjusted earnings of $9.62 per share beat the consensus estimate of $6.15 and rose 25% year over year. Net income available to common shareholders of $459.6 million climbed 23% from 2019.

Revenues Climb, Expenses Increase

In 2020, net revenues climbed nearly 13% year over year to $2.26 billion. Also, the top line surpassed the consensus estimate of $1.94 billion.

Net revenues remained flat year over year at $927.3 million in the reported quarter. Jump in underwriting fees and advisory fees led to rise. The figure surpassed the Zacks Consensus Estimate of $581.3 million. On an adjusted basis, net revenues were $969.9 million, up 45%.

Total expenses flared up 19.3% to $600.6 million from the prior-year quarter. This upswing mainly stemmed from rise in employee compensation and benefits expenses.

Adjusted compensation ratio was 53.9%, up from the year-earlier quarter’s 52.4%.

Adjusted operating margin came in at 36.4% compared with the prior-year quarter’s 38.9%.

Quarterly Segment Performance (Adjusted)

Investment Banking: Net revenues increased 46% year over year to $948.9 million. Also, operating income rose considerably to $369.3 million. Advisory client transactions were 324,000, up 15%. Notably, underwriting revenues of $95 million in the quarter more than doubled from the prior-year period.

Investment Management: Net revenues were $21 million, up 20% from the prior-year quarter. Operating income was $7 million, up 38%. Additionally, AUM of $10.1 million was reported in the fourth quarter, down 5%. 

Balance-Sheet Position

As of Dec 31, 2020, cash and cash equivalents were $829.6 million and marketable and investment securities totaled $1.1 billion. Moreover, current assets exceeded current liabilities by $1.3 billion as of the same date.

Our Viewpoint

Evercore displayed an impressive performance during the fourth quarter. Its top-line strength displays earnings stability. Apart from this, the company’s strategic initiatives to bolster its investment banking segment bode well. Though escalating expenses are a concern, it is well poised to undertake any opportunistic expansion given its sound liquidity position.

Evercore Inc Price, Consensus and EPS Surprise

Evercore Inc Price, Consensus and EPS Surprise

Evercore Inc price-consensus-eps-surprise-chart | Evercore Inc Quote

Currently, Evercore flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Banks

Morgan Stanley’s (MS - Free Report) fourth-quarter 2020 adjusted earnings of $1.92 per share easily outpaced the Zacks Consensus Estimate of $1.29. Also, the bottom line improved 48% from the year-ago quarter.

Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2020 adjusted earnings per share of 69 cents outpaced the Zacks Consensus Estimate of 59 cents. Also, the bottom line reflects growth of 19% on a year-over-year basis.

Charles Schwab’s (SCHW - Free Report) fourth-quarter 2020 adjusted earnings of 74 cents per share beat the Zacks Consensus Estimate of 70 cents. Also, the bottom line grew 17% from the prior-year quarter, as the company reported first full-quarter results after closing TD Ameritrade deal in October 2020.

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