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Why Is Evercore (EVR) Up 11.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Evercore (EVR). Shares have added about 11.8% 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 Q3 Earnings & Revenues Beat Estimates

Evercore reported adjusted earnings per share of $2.20 in third-quarter 2022, surpassing the Zacks Consensus Estimate of $1.35. However, the bottom line was 44% down from the prior-year quarter.

While the decline in the net revenues of the Investment Banking and Investment Management segments affected the overall top line, a decline in expenses alleviated the bottom-line pressure. Amid a challenging environment, the company saw a decline in AUM.

On a GAAP basis, net income available to common shareholders was $82.4 million or $2.03 per share, down from $159.5 million or $3.74 per share in the year-ago quarter.

Revenues Decline, Expenses Fall

Net revenues decreased 30% year over year to $576.9 million in the reported quarter. Nonetheless, the top line surpassed the consensus estimate of $462 million. The decline was mainly due to a decrease in all revenue components other than commissions and related revenues.

Total expenses decreased 22.8% to $446.5 million from the prior-year quarter.
The adjusted compensation ratio was 61%, up from the prior-year period’s 58.5%.

The adjusted operating margin was 23.4%, down from the prior-year quarter’s 31.5%.

Quarterly Segmental Performance

Investment Banking: Net revenues declined 30.5% year over year to $560.5 million. Operating income decreased 49.4% to $126.9 million.

Investment Management: Net revenues were $16.4 million, down 1.3% from the prior-year quarter. Operating income was $3.48 million against an operating loss of $5.48 million from the year-ago quarter’s tally. AUM was $9.98 billion as of the third-quarter end, down 12% from the year-ago quarter.

Balance Sheet Position

As of Sep 30, 2022, cash and cash equivalents were $473.1 million, and investment securities and certificates of deposit were $1.3 billion. Current assets exceeded current liabilities by $1.5 billion as of the same date.

Capital Deployment Activities

In the third quarter of 2022, 0.3 million shares were repurchased by the company at an average price of $98.71 per share.

Further, Evercore returned capital worth $565.3 million to its shareholders in the first nine months of 2022 through dividends and repurchases of 3.9 million shares at an average price of $118.28 per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -8.1% due to these changes.

VGM Scores

Currently, Evercore has a poor Growth Score of F, 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions 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.

Performance of an Industry Player

Evercore belongs to the Zacks Financial - Investment Bank industry. Another stock from the same industry, The Charles Schwab Corporation (SCHW), has gained 5.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

The Charles Schwab Corporation reported revenues of $5.5 billion in the last reported quarter, representing a year-over-year change of +20.4%. EPS of $1.10 for the same period compares with $0.84 a year ago.

The Charles Schwab Corporation is expected to post earnings of $1.08 per share for the current quarter, representing a year-over-year change of +25.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -3.8%.

The Charles Schwab Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.

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