New York City-based Evercore Inc. (EVR) is a leading global independent investment banking advisory company. It helps clients raise public and private capital, delivers equity research, equity sales, agency trading execution, and provides wealth and investment management services to high-net-worth and institutional investors.
In its recent quarterly earnings release, the company reported robust financial performance. Its asset management and administration fees rose $3.0 million, or 21%, year over year, owing to increased fees from wealth management clients.
In addition, its commissions and related revenue increased or 4% from the prior-year quarter, primarily reflecting higher revenues from research subscriptions and convertible securities.
Here is what could shape EVR's performance in the near term:
Share Buy Back
Last month, EVR's board of directors authorized a share buyback program of up to $1.4 billion or 10 million shares of Evercore Inc. Class A common stock and Evercore LP Units. This authorization underscores Evercore's continuing commitment to its capital-return objectives, including balancing dilution from annual bonus equity and new hire grants through share repurchases and returning excess cash not needed for business expansion through share repurchases.
Robust Financials
During the fourth quarter, ended Dec. 31, 2021, EVR's net revenue increased 20.3% year-over-year to $1.12 billion. Its operating income increased 39.6% year-over-year to $456.1 million. And the company's net income grew 34.3% from its year-ago value to $295.86 million, while its EPS grew 38.6% from the prior-year quarter to $6.96.
Strong Profitability
EVR's 97.2% trailing-12-months gross profit margin is 54.1% higher than the 63.1% industry average. Also, its asset turnover ratio and ROA are 330.3% and 1350.4% higher than the respective industry averages. Furthermore, its $1.38 billion in cash from operations is 882.7% higher than the $140.92 million industry average.
Consensus Rating and Price Target Indicate Potential Upside
Of the seven Wall Street analysts that rated EVR, three rated it Buy, and four rated it Hold. The 12-month median price target of $160.5 indicates a 45.4% potential upside. The price targets range from a low of $141.00 to a high of $180.00.
POWR Ratings Reflect Solid Prospects
EVR has an overall B grade, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. EVR has an A grade for Quality. EVR's solid earnings and revenue growth is consistent with the Quality grade.
Among the 22 stocks in the B-rated Investment Brokerage industry, EVR is ranked #5.
Beyond what I stated above, we have graded MU for Sentiment, Stability, Growth, Value, and Momentum. Get all EVR ratings here.
Note that EVR is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio. Learn more here.
Bottom Line
EVR has witnessed 57% year-over-year growth in advisory revenues, exceeding $2.7 billion for the first time in the company's history. In addition, given the favorable analysts' sentiments and the company's fundamental strength, the stock could deliver solid gains in the near term. So, we think the stock could be a great bet now.
How Does Evercore Inc. (EVR) Stack Up Against its Peers?
EVR has an overall POWR B Rating, which equates to a Buy rating. Check out these other stocks within the Investment Brokerage industry: Manning & Napier Inc. (MN), which has an A (Strong Buy) rating, and Piper Sandler Companies (PIPR), and Houlihan Lokey Inc. (HLI), which have B (BUY) ratings.
EVR shares were unchanged in premarket trading Tuesday. Year-to-date, EVR has declined -18.30%, versus a -11.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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