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Why Is Evercore (EVR) Down 13.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Evercore (EVR - Free Report) . Shares have lost about 13.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Evercore due for a breakout? 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 catalysts.

Evercore Q4 Earnings Beat Estimates

Evercore’s fourth-quarter 2019 adjusted earnings per share of $2.72 surpassed the Zacks Consensus Estimate of $2.14. However, the bottom line declined 31% from the prior-year quarter.

The quarterly results reflected lower expenses and rise in AUM balance. In addition, liquidity position was consistently strong. However, decline in net revenues was a major drag. Also, performance of the Investment Banking segment failed to impress.

Including certain non-recurring items, on a GAAP basis, net income available to common shareholders was $105.2 million or $2.48 per share down from $163.3 million or $3.67 per share in the year-ago quarter.

In 2019, adjusted earnings of $7.70 per share declined 15% from the prior year. However, it outpaced the consensus estimate of $7.54. After adjustments, net income came at 297.4 million or $6.89 per share compared with $377.2 million or $8.33 in 2018.

Revenues Decline, Expenses Down

Net revenues (adjusted) decreased 14% year over year to $668.5 million in the reported quarter. This downside resulted from fall in advisory fees (down 19%). On a GAAP basis, net revenues were $660.1 million, down 14%.

Adjusted net revenues in 2019 were $2 billion, down 2%. Yet, the top line surpassed the Zacks Consensus Estimate of $1.9 billion. On a GAAP basis, net revenues of $2 billion decreased 3% from the prior year.

Total expenses declined 3% to $503.4 million from the prior-year quarter. This downside stemmed from fall in employee compensation and benefits expenses, professional fees and execution, clearing and custody fees.

Adjusted compensation ratio was 58.6%, up from the year-earlier quarter’s 55%.

Adjusted operating margin came in at 26.9% compared with the prior-year quarter’s 34%.

Quarterly Segment Performance (Adjusted)

Investment Banking: Net revenues declined 15% year over year to $650.9 million. Also, operating income moved down 33% to $174.4 million. Advisory client transactions were 281,000, down 9%.

Investment Management: Net revenues were $17.5 million, up 22% year over year. Operating income was $5.1 million up 52%. Additionally, AUM balance of $10.7 million was reported in the fourth quarter, up 17%.  

Balance Sheet Position

As of Dec 31, 2019, cash, cash equivalents, marketable securities and certificates of deposit totaled $1.3 billion. Moreover, current assets exceeded current liabilities by $1 billion as of the same date.

Repurchase Update

During the December-end quarter, the company repurchased nearly 0.4 million shares at an average cost of $75.89 per share. Notably, during 2019, the company repurchased 2.4 million shares at an average price per share of $80.69.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -17.86% due to these changes.

VGM Scores

Currently, Evercore has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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


Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Evercore has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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