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Why Is Evercore (EVR) Up 4.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Evercore (EVR - Free Report) . Shares have added about 4.4% 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’s Q4 Earnings Top Estimates, Expenses Rise

Evercore reported fourth-quarter 2020 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 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.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 15.28% due to these changes.

VGM Scores

At this time, Evercore has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Evercore has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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