Evercore Inc.’s EVR strength in investment banking (IB) business is expected to support its revenue growth over the long term. Steady capital-distribution activities are supported by a decent liquidity position. However, escalating expenses are likely to limit bottom-line growth in the long term.
Evercore generates most of its revenues from the IB business. Challenged global merger and acquisitions as well as underwriting activities on the back of macroeconomic and geopolitical concerns are expected to keep hurting IB net revenues in 2023. Nonetheless, the company’s efforts to boost its client base in advisory solutions, diversify revenue sources and expand geographically will aid revenues going forward.
Evercore maintains a strong balance sheet. As of Sep 30, 2023, cash and cash equivalents were $492.6 million, and investment securities and certificates of deposit were $1.14 billion. Total notes payable was $372.42 million as of the same date. Moreover, current assets exceeded current liabilities by $1.57 billion. Thus, EVR exhibits a sound liquidity position.
Evercore remains committed to enhancing shareholders’ value, as seen from its involvement in steady capital-distribution activities. In April 2023, it sequentially hiked its dividend by 5.5% to 76 cents per share. Further, in February 2022, it was authorized with a share-repurchase program worth $1.4 billion, with no expiration date. Consistent earnings and strong liquidity position indicate that capital-distribution activities are sustainable.
However, Evercore’s Investment Management segment’s revenues witnessed a negative compound annual growth rate of 1.2% over the last five years (2017-2022). Revenue growth has been weak primarily due to the disposal and restructuring of several related units. Also, any volatility in institutional assets under management trend on account of foreign exchange fluctuations is likely to result in reduced fees.
EVR’s expenses have been rising over the years. Though expenses declined in 2022 and the first nine months of 2023 majorly due to a fall in employee compensation and benefit expenses, management expects the compensation ratio to witness additional upward pressure in the fourth quarter of the year. A steady expense rise will likely limit bottom-line growth.
Further, the financial advisory market faces intense competition and impels companies to keep pace with the changing trends. Evercore faces competition from other large and established financial institutions, with greater name recognition and the ability to offer a wider range of products, which enhance their competitive position.
Shares of this Zacks Rank #3 (Hold) company have rallied 31.6% over the past six months compared with the industry’s 2% growth.
Image Source: Zacks Investment Research
Stocks to Consider
A couple of better-ranked stocks from the banking space are First Citizens BancShares, Inc. FCNCA and Fifth Third Bancorp FITB.
First Citizens BancShares currently carries a Zacks Rank #2 (Buy). Its earnings estimate for 2023 has been revised 3.7% upward over the past 30 days. In the past six months, FCNCA shares have improved 11.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings estimate for Fifth Third Bancorp has been revised 3.3% upward for 2023 over the past 30 days. Shares of FITB have rallied 8.2% in the past six months. FITB currently carries a Zacks Rank #2.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
Evercore Inc (EVR) : Free Stock Analysis Report
First Citizens BancShares, Inc. (FCNCA) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Image and article originally from www.nasdaq.com. Read the original article here.