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Evercore (EVR) Up 1.5% on Q4 Earnings Beat as Expenses Fall
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Evercore’s (EVR - Free Report) shares have gained 1.5% following the release of its fourth-quarter and full-year 2022 results. Quarterly adjusted earnings per share of $3.50 handily surpassed the Zacks Consensus Estimate of $2.65. However, the bottom line was down 51% from the prior-year quarter’s $7.15.
While the decline in the net revenues of the Investment Banking & Equities and Investment Management segments hampered the overall top line, lower expenses alleviated the bottom-line pressure. Amid a challenging operating environment, EVR saw a decline in assets under management (AUM).
Net income available to common shareholders (GAAP basis) was $140.4 million or $3.44 per share, down from $295.9 million or $6.96 per share reported in the year-ago quarter.
In 2022, adjusted earnings of $12.01 per share beat the Zacks Consensus Estimate of $11.15 but decreased 31.4% year over year. Net income available to common shareholders (GAAP basis) of $476.5 million or $11.61 per share dropped from $740.1 million or $17.08 per share in 2021.
Revenues & Expenses Decline
In fourth-quarter 2022, net revenues of $831.3 million surpassed the Zacks Consensus Estimate of $683.5 million. However, the top line decreased 25.5% year over year. A decline in advisory fees, underwriting fees, commissions and related revenues as well as asset management and administration fees led to the fall.
On an adjusted basis, net revenues came in at $836.7 million, down 25.6%.
In 2022, net revenues dropped 16% to $2.76 billion. However, the top line outpaced the Zacks Consensus Estimate of $2.64 billion. On an adjusted basis, net revenues were $2.79 billion, down 16%.
Total expenses declined 5.8% to $621.2 million. The fall was mainly due to lower employee compensation and benefits costs.
Adjusted compensation ratio was 62.5%, up from 49.7%.
Adjusted operating margin came in at 26.1%, down from the prior-year quarter’s 41.3%.
Quarterly Segment Performance (Adjusted)
During fourth-quarter 2022, EVR changed the name of its Investment Banking segment to Investment Banking & Equities.
Investment Banking & Equities: Net revenues declined 25.6% year over year to $820.4 million. Also, operating income decreased 53% to $215.2 million.
Investment Management: Net revenues were $16.2 million, down 22.3% from the prior-year quarter’s reading. Operating income was $2.8 million, down 54.3% from the year-ago quarter’s tally. AUM of $10.54 billion as of Dec 31, 2022, was down 13.5% from the year-ago quarter.
Balance-Sheet Position
As of Dec 31, 2022, cash and cash equivalents were $663.4 million, and investment securities and certificates of deposit were $1.4 billion. Moreover, current assets exceeded current liabilities by $1.6 billion as of the same date.
Capital-Deployment Activities
In fourth-quarter 2022, Evercore repurchased 0.5 million shares at an average price of $109.99 per share.
Evercore returned a capital worth $655 million to its shareholders in 2022 through dividends and repurchases of 4.4 million shares at an average price of $117.27.
Our Viewpoint
Evercore’s financial performance in the fourth quarter seems disappointing as revenues declined. Nonetheless, amid the unfavorable macro-economic backdrop for deal-making, the company’s initiatives to boost its client base in advisory solutions and expand geographically are impressive 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) fourth-quarter 2022 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.10. The bottom line, however, soared 24% from the prior-year quarter. Our estimate for adjusted earnings were $1.05 per share.
Results of SCHW benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility affecting trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were a headwind.
Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2022 adjusted earnings per share of $1.30 handily surpassed the Zacks Consensus Estimate of $1.16 and increased 56.6% from the prior-year quarter.
Results of IBKR were primarily aided by an improvement in revenues. Also, the capital position was strong. However, higher expenses and a fall in daily average revenue trades were headwinds.
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Evercore (EVR) Up 1.5% on Q4 Earnings Beat as Expenses Fall
Evercore’s (EVR - Free Report) shares have gained 1.5% following the release of its fourth-quarter and full-year 2022 results. Quarterly adjusted earnings per share of $3.50 handily surpassed the Zacks Consensus Estimate of $2.65. However, the bottom line was down 51% from the prior-year quarter’s $7.15.
While the decline in the net revenues of the Investment Banking & Equities and Investment Management segments hampered the overall top line, lower expenses alleviated the bottom-line pressure. Amid a challenging operating environment, EVR saw a decline in assets under management (AUM).
Net income available to common shareholders (GAAP basis) was $140.4 million or $3.44 per share, down from $295.9 million or $6.96 per share reported in the year-ago quarter.
In 2022, adjusted earnings of $12.01 per share beat the Zacks Consensus Estimate of $11.15 but decreased 31.4% year over year. Net income available to common shareholders (GAAP basis) of $476.5 million or $11.61 per share dropped from $740.1 million or $17.08 per share in 2021.
Revenues & Expenses Decline
In fourth-quarter 2022, net revenues of $831.3 million surpassed the Zacks Consensus Estimate of $683.5 million. However, the top line decreased 25.5% year over year. A decline in advisory fees, underwriting fees, commissions and related revenues as well as asset management and administration fees led to the fall.
On an adjusted basis, net revenues came in at $836.7 million, down 25.6%.
In 2022, net revenues dropped 16% to $2.76 billion. However, the top line outpaced the Zacks Consensus Estimate of $2.64 billion. On an adjusted basis, net revenues were $2.79 billion, down 16%.
Total expenses declined 5.8% to $621.2 million. The fall was mainly due to lower employee compensation and benefits costs.
Adjusted compensation ratio was 62.5%, up from 49.7%.
Adjusted operating margin came in at 26.1%, down from the prior-year quarter’s 41.3%.
Quarterly Segment Performance (Adjusted)
During fourth-quarter 2022, EVR changed the name of its Investment Banking segment to Investment Banking & Equities.
Investment Banking & Equities: Net revenues declined 25.6% year over year to $820.4 million. Also, operating income decreased 53% to $215.2 million.
Investment Management: Net revenues were $16.2 million, down 22.3% from the prior-year quarter’s reading. Operating income was $2.8 million, down 54.3% from the year-ago quarter’s tally. AUM of $10.54 billion as of Dec 31, 2022, was down 13.5% from the year-ago quarter.
Balance-Sheet Position
As of Dec 31, 2022, cash and cash equivalents were $663.4 million, and investment securities and certificates of deposit were $1.4 billion. Moreover, current assets exceeded current liabilities by $1.6 billion as of the same date.
Capital-Deployment Activities
In fourth-quarter 2022, Evercore repurchased 0.5 million shares at an average price of $109.99 per share.
Evercore returned a capital worth $655 million to its shareholders in 2022 through dividends and repurchases of 4.4 million shares at an average price of $117.27.
Our Viewpoint
Evercore’s financial performance in the fourth quarter seems disappointing as revenues declined. Nonetheless, amid the unfavorable macro-economic backdrop for deal-making, the company’s initiatives to boost its client base in advisory solutions and expand geographically are impressive 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 #2 (Buy). You can see the complete list of today’s Zacks #1Rank (Strong Buy) stocks here.
Peer Performance
Charles Schwab’s (SCHW - Free Report) fourth-quarter 2022 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate of $1.10. The bottom line, however, soared 24% from the prior-year quarter. Our estimate for adjusted earnings were $1.05 per share.
Results of SCHW benefited from higher rates, which led to a rise in net interest income. Thus, revenues witnessed an improvement despite higher volatility affecting trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were a headwind.
Interactive Brokers Group’s (IBKR - Free Report) fourth-quarter 2022 adjusted earnings per share of $1.30 handily surpassed the Zacks Consensus Estimate of $1.16 and increased 56.6% from the prior-year quarter.
Results of IBKR were primarily aided by an improvement in revenues. Also, the capital position was strong. However, higher expenses and a fall in daily average revenue trades were headwinds.