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Evercore (EVR) Q3 Earnings Beat Mark, Stock Declines 6.6%

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Evercore (EVR - Free Report) reported third-quarter 2021 adjusted earnings per share of $3.96, which surpassed the Zacks Consensus Estimate of $3.32. Also, the bottom line came ahead of the prior-year quarter’s $1.11 per share.

Impressive revenue growth with support from higher advisory fees backed the company. Also, rise in assets under management (AUM) was a tailwind. In addition, Evercore’s liquidity position was consistently strong through the quarter. However, escalating expenses were a major drag. Hence, following the results, shares of the company declined 6.58%.

On a GAAP basis, net income available to common shareholders was $159.5 million or $3.74 per share compared with the $42.6 million or $1.01 reported in the year-ago quarter.

Revenues Climb, Expenses Flare Up

Total revenues increased substantially year over year to $823.56 million in the reported quarter. Jump in advisory fees, commissions and related revenues as well as asset management and administration fees led to the uptick. The reported figure also beat the Zacks Consensus Estimate of $673.93 million. On an adjusted basis, net revenues came in at $831.6 million, up substantially.

Total expenses shot up 71% to $578.4 million from the prior-year quarter’s level. This upswing was offset partly by a decrease in execution, clearing and custody fees.

Adjusted compensation ratio was 58.5%, down from the year-earlier quarter’s 63.6%.

Adjusted operating margin came in at 31.5% compared with the prior-year quarter’s 19%.

Quarterly Segment Performance (Adjusted)

Investment Banking: Net revenues climbed substantially year over year to $811.9 million. Also, operating income increased considerably to $255.6 million. Notably, underwriting revenues of $54.38 million in the quarter dropped 18% from the prior-year period’s level.

Investment Management: Net revenues were $19.75 million, up 8.3% from the prior-year quarter’s reading. Operating income was $6.2 million, up 1.2% from the year-ago quarter’s tally. Additionally, an AUM of $11.3 billion was reported in the third quarter, up 3% from the year-ago quarter’s level.

Sound Balance-Sheet Position

As of Sep 30, 2021, cash and cash equivalents were $478.8 million and investment securities and certificates of deposit were $1.3 billion. Moreover, current assets exceeded current liabilities by $1.4 billion as of the same date.

Capital-Deployment Activities

The company returned a record level of capital return worth $631.5 million to its shareholders during the quarter through dividends and repurchases of 4.1 million shares at an average price of $129.22.

Our Viewpoint

Evercore displayed an impressive performance during the third quarter. Its top-line strength reflects earnings stability. This apart, the company’s strategic initiatives to bolster its investment banking segment bode well. Though its escalating expenses are a concern, the company 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 sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Banks

BancorpSouth Bank delivered net operating earnings of 68 cents per share, beating the Zacks Consensus Estimate of 67 cents. However, the bottom line compares unfavorably with 69 cents reported in the year-ago quarter.

Bank of Hawaii Corporation (BOH - Free Report) reported third-quarter 2021 earnings per share of $1.52, surpassing the Zacks Consensus Estimate of $1.34. Also, the bottom line compares favorably with 95 cents reported in the prior-year quarter.

Bank OZK’s (OZK - Free Report) third-quarter 2021 earnings per share of $1 surpassed the Zacks Consensus Estimate of 97 cents. The bottom line reflects growth of 19% from the year-earlier quarter’s number.

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