Yahoo Finance Evercore (EVR) Q1 Earnings Beat, Shares Dip on Revenue Decline
Evercore’s EVR shares slumped 8.5% following the release of its first-quarter 2023 results. Quarterly adjusted earnings per share of $2.16 handily surpassed the Zacks Consensus Estimate of $1.74. However, the bottom line was down from the prior-year quarter’s $3.80.
While the decline in 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 $83.4 million, down from $158 million reported in the year-ago quarter.
Revenues & Expenses Decline
In first-quarter 2023, net revenues of $576.3 million surpassed the Zacks Consensus Estimate of $512.6 million. However, the top line decreased 20.7% 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.
Total expenses declined 9.4% to $465.2 million. The fall was mainly due to lower employee compensation and benefits costs.
The adjusted compensation ratio was 63.5%, up from the prior-year quarter’s 50%.
The adjusted operating margin was 20%, down from the prior-year quarter’s 29.5%.
Quarterly Segmental Performance (Adjusted)
Investment Banking & Equities: Net revenues declined 21% year over year to $577.7 million. Also, operating income decreased 47.2% to $109.9 million.
Investment Management: Net revenues were $18.7 million, down 3.4% from the prior-year quarter’s reading. Operating income was $5.49 million, down 15.3% from the year-ago quarter. AUM of $11.01 billion as of Mar 31, 2023, was down 5% from the year-ago quarter.
Balance-Sheet Position
As of Mar 31, 2023, cash and cash equivalents were $579.2 million, and investment securities and certificates of deposit were $803.1 million. Moreover, current assets exceeded current liabilities by $1.5 billion as of the same date.
Capital Deployment Activities
In first-quarter 2023, Evercore repurchased 2.2 million shares at an average price of $132.20 per share.
Our Viewpoint
The company’s financial performance in the first quarter seems disappointing, as revenues declined. Nonetheless, amid the unfavorable macroeconomic 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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Performance
Charles Schwab’s SCHW first-quarter 2023 adjusted earnings of 93 cents per share beat the Zacks Consensus Estimate of 90 cents. The bottom line also grew 21% from the prior-year quarter.
SCHW’s results benefited from higher rates, which led to a rise in net interest income (NII). Thus, revenues improved despite lower bank deposit fees and higher volatility hurting trading income. Also, the absence of fee waivers and solid brokerage account numbers acted as tailwinds during the quarter. However, higher expenses were undermining factors for SCHW.
Interactive Brokers Group’s IBKR first-quarter 2023 adjusted earnings per share of $1.35 missed the Zacks Consensus Estimate of $1.40. However, the bottom line reflects a rise of 64.6% from the prior-year quarter.
Interactive Brokers' results were primarily hurt by an increase in expenses. A fall in daily average revenue trades (DARTs) was another headwind. Nevertheless, an improvement in revenues was a tailwind. Also, Interactive Brokers’ capital position was strong.
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