Evercore On Track To Grow Investment Banking, Costs Rise

On Dec 10, we issued an updated research report on Evercore (NYSE:EVR) . The company’s major revenue contributing segment — Investment Banking — continues to support its top line. Notably, it remains focused on undertaking efforts to increase client base in advisory solutions along with geographical expansion efforts, in order to further drive revenue growth.

Evercore remains committed to enhancing shareholders’ value. It is seen from its involvement in steady capital deployment activities, which seem sustainable as the company’s debt/equity ratio compares favorably with the broader industry. The company has been raising dividends every year since 2010, with the latest hike of 25% announced in April 2018. Also, a share repurchase program is in place.

Further, Evercore seems undervalued when compared with the broader industry as its current price-to-earnings and price-to-cash flow ratios are below the respective industry averages. Further, the stock has a Value Score of A.

However, falling institutional assets under management trend, on account of foreign exchange fluctuations, has resulted in reduced fees. Also, no major contribution is expected from this segment to the company’s revenues in the near term.

Also, Evercore’s expense base has seen a CAGR of 19% over the last five years (ended 2017). In order to build its segments, the company has been on a hiring spree, which has resulted in increased compensation costs. Thus, continual expense rise exposes the company to operational risks, which is likely to impact bottom-line growth.

On account of these concerns, the stock has lost 15.5% in a year’s time compared with 23.1% decline of the industry it belongs to.

The Zacks Consensus Estimate for current-year earnings has remained stable at $7.15 over the past 30 days. As a result, it currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

E*TRADE Financial Corporation (NASDAQ:ETFC) has witnessed 6% upward estimate revision over the past 60 days. Also, the company’s shares have risen nearly 29% in the past two years. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

TD Ameritrade Holding Corporation (NASDAQ:AMTD) Zacks Consensus Estimate for current-year earnings has been revised 2.6% upward over the past 60 days. Also, the company’s shares have risen nearly 15% in the past two years. It currently carries a Zacks Rank #2 (Buy).

Interactive Brokers Group (NYSE:IBKR) has witnessed nearly 1% upward estimate revision for current-year earnings over the past 60 days. Also, the company’s shares have risen nearly 34% in the past two years. It also flaunts a Zacks Rank of 1.

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