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Here's Why You Should Hold on to Evercore (EVR) at Present (Revised)
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Evercore Inc.’s (EVR - Free Report) efforts to boost its client base in advisory solutions and diversify revenue sources are expected to support its top-line growth over the long term. Steady capital-distribution activities are supported by a decent liquidity position. However, escalating expenses are likely to limit bottom-line growth in the long term.
Evercore generates most of its revenues from the IB business. The tough macroeconomic backdrop throughout 2023, involving geopolitical concerns, high interest rates and recession fears, led to an economic slowdown. Hence, a muted backdrop of global mergers and acquisitions, as well as underwriting activities, is expected to keep hurting net revenues from IB in 2023.
Nonetheless, the company has showcased strength in its IB business over the past years. In fact, it witnessed a compound annual growth rate (CAGR) of 7.6% from 2018-2022. Also, Evercore’s efforts to boost its client base in advisory solutions will help it to navigate macro challenges and deliver decent results. Moreover, attempts to diversify revenue sources and expand geographically should support revenues going forward.
Evercore maintains a strong balance sheet. As of Sep 30, 2023, cash and cash equivalents were $492.6 million, and investment securities and certificates of deposit were $1.14 billion. Total notes payable was $372.42 million as of the same date. Moreover, current assets exceeded current liabilities by $1.57 billion. Thus, EVR exhibits a sound liquidity position.
Evercore remains committed to enhancing shareholders’ value, as seen from its involvement in steady capital-distribution activities. In April 2023, it sequentially hiked its dividend by 5.5% to 76 cents per share. Further, in February 2022, it was authorized with a share-repurchase program worth $1.4 billion, with no expiration date. Consistent earnings and strong liquidity position indicate that capital-distribution activities are sustainable.
However, Evercore’s Investment Management segment's revenues witnessed a negative CAGR of 1.2% over the last five years (2017-2022). Revenue growth has been weak primarily due to the disposal and restructuring of several related units. Also, any volatility in institutional assets under management trend on account of foreign exchange fluctuations is likely to result in reduced fees.
EVR’s expenses have been rising over the years. Though expenses declined in 2022 and the first nine months of 2023, majorly due to a fall in employee compensation and benefit expenses, management expects the compensation ratio to witness additional upward pressure in the fourth quarter of the year. A steady expense rise will likely limit bottom-line growth.
Further, the financial advisory market faces intense competition and impels companies to keep pace with the changing trends. Evercore faces competition from other large and established financial institutions, with greater name recognition and the ability to offer a wider range of products, which enhance their competitive position.
Shares of this Zacks Rank #3 (Hold) company have rallied 31.9% over the past six months compared with the industry’s 3.8% growth.
Image Source: Zacks Investment Research
Stocks to Consider
A couple of better-ranked stocks from the finance space are Community Trust Bancorp, Inc. (CTBI - Free Report) and Interactive Brokers Group, Inc. (IBKR - Free Report) .
Community Trust’s earnings estimates for 2023 have been revised 5% upward over the past 60 days. In the past six months, CTBI shares have gained 12.1%. Currently, Community Trust sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Interactive Brokers have been revised 1% upward for 2023 in the past 30 days. Shares of IBKR have increased 7.1% in the past six months. The company currently carries a Zacks Rank #2 (Buy).
(We are reissuing this article to correct a mistake. The original article, issued on November 17, 2023, should no longer be relied upon.)
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Here's Why You Should Hold on to Evercore (EVR) at Present (Revised)
Evercore Inc.’s (EVR - Free Report) efforts to boost its client base in advisory solutions and diversify revenue sources are expected to support its top-line growth over the long term. Steady capital-distribution activities are supported by a decent liquidity position. However, escalating expenses are likely to limit bottom-line growth in the long term.
Evercore generates most of its revenues from the IB business. The tough macroeconomic backdrop throughout 2023, involving geopolitical concerns, high interest rates and recession fears, led to an economic slowdown. Hence, a muted backdrop of global mergers and acquisitions, as well as underwriting activities, is expected to keep hurting net revenues from IB in 2023.
Nonetheless, the company has showcased strength in its IB business over the past years. In fact, it witnessed a compound annual growth rate (CAGR) of 7.6% from 2018-2022. Also, Evercore’s efforts to boost its client base in advisory solutions will help it to navigate macro challenges and deliver decent results. Moreover, attempts to diversify revenue sources and expand geographically should support revenues going forward.
Evercore maintains a strong balance sheet. As of Sep 30, 2023, cash and cash equivalents were $492.6 million, and investment securities and certificates of deposit were $1.14 billion. Total notes payable was $372.42 million as of the same date. Moreover, current assets exceeded current liabilities by $1.57 billion. Thus, EVR exhibits a sound liquidity position.
Evercore remains committed to enhancing shareholders’ value, as seen from its involvement in steady capital-distribution activities. In April 2023, it sequentially hiked its dividend by 5.5% to 76 cents per share. Further, in February 2022, it was authorized with a share-repurchase program worth $1.4 billion, with no expiration date. Consistent earnings and strong liquidity position indicate that capital-distribution activities are sustainable.
However, Evercore’s Investment Management segment's revenues witnessed a negative CAGR of 1.2% over the last five years (2017-2022). Revenue growth has been weak primarily due to the disposal and restructuring of several related units. Also, any volatility in institutional assets under management trend on account of foreign exchange fluctuations is likely to result in reduced fees.
EVR’s expenses have been rising over the years. Though expenses declined in 2022 and the first nine months of 2023, majorly due to a fall in employee compensation and benefit expenses, management expects the compensation ratio to witness additional upward pressure in the fourth quarter of the year. A steady expense rise will likely limit bottom-line growth.
Further, the financial advisory market faces intense competition and impels companies to keep pace with the changing trends. Evercore faces competition from other large and established financial institutions, with greater name recognition and the ability to offer a wider range of products, which enhance their competitive position.
Shares of this Zacks Rank #3 (Hold) company have rallied 31.9% over the past six months compared with the industry’s 3.8% growth.
Image Source: Zacks Investment Research
Stocks to Consider
A couple of better-ranked stocks from the finance space are Community Trust Bancorp, Inc. (CTBI - Free Report) and Interactive Brokers Group, Inc. (IBKR - Free Report) .
Community Trust’s earnings estimates for 2023 have been revised 5% upward over the past 60 days. In the past six months, CTBI shares have gained 12.1%. Currently, Community Trust sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings estimates for Interactive Brokers have been revised 1% upward for 2023 in the past 30 days. Shares of IBKR have increased 7.1% in the past six months. The company currently carries a Zacks Rank #2 (Buy).
(We are reissuing this article to correct a mistake. The original article, issued on November 17, 2023, should no longer be relied upon.)