Evercore (EVR) Down 16.6% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Evercore (EVR). Shares have lost about 16.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.

Evercore Q1 Earnings Beat Estimates, Costs Decline

Evercore delivered a positive earnings surprise of 4.4% in first-quarter 2019. Adjusted earnings per share of $1.66 surpassed the Zacks Consensus Estimate of $1.59. However, the figure came in significantly lower than the prior-year quarter’s earnings of $2.24 per share.

The quarterly results reflected prudent expense management and rise in AUM. Further, liquidity position was consistently strong. However, lower revenues were a major drag.

Including certain one-time items, on a GAAP basis, net income available to common shareholders was $67.2 million or $1.52 per share compared with $95.5 million or $2.10 per share in the year-ago quarter.

Revenues Fall, Expenses Decline

Net revenues slipped 10% year over year to $415.3 million in the reported quarter. This downside resulted from decline in advisory fees (down 13.9%). On an adjusted basis, net revenues were $419.8 million, down 10%.

Total expenses declined 5.5% to $324.1 million from the prior-year quarter. This decrease resulted from fall in employee compensation and benefits expenses.

Adjusted compensation ratio was 58%, in line with the year-earlier quarter’s figure.

Adjusted operating margin came in at 22.8% compared with the prior-year quarter’s 26.7%.

Quarterly Segment Performance (Adjusted)

Investment Banking: Net revenues dropped 11% year over year to $403.7 million. Also, operating income slipped 24% to $311.9 million. Advisory client transactions were 217,000, up 8% year over year.

Investment Management: Net revenues were $16.1 million, up 4% from the comparable quarter last year. Operating income was $3.9 million compared with $4.2 million recorded a year ago. However, AUM of $9.8 million was reported in the first quarter, up 4%. 

Balance Sheet Position

As of Mar 31, 2019, cash, cash equivalents, marketable securities and certificates of deposit totaled $551.8 million. Further, current assets exceeded current liabilities by $690.7 million as of the same date.

Capital Deployment

During the March-end quarter, the company repurchased 1.2 million shares at average cost of $86.19 and returned $137.8 million to shareholders, including dividends.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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