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Evercore Inc. 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Evercore Inc.

Filing date:

02/21/2025

TLDR:

Evercore Inc.’s 2024 Form 10-K shows strong revenue growth driven by the Investment Banking & Equities segment. The company faces risks including market volatility and competition, but has opportunities in organic growth and strategic recruitment.

ELI5:

Evercore, an investment banking firm, made more money in 2024 because their investment banking business did well. They need to watch out for market ups and downs and competition, but they can grow by expanding their business and hiring talented people.

Accession #:

0001360901-25-000005

Published on

Analyst Summary

  • Total revenues increased by 23% to $2.996 billion, driven by growth in Advisory Fees (up 24%) and Underwriting Fees (up 41%).
  • Net Income Attributable to Evercore Inc. increased by 48% to $378.3 million, resulting in diluted EPS of $9.08, a 43% increase.
  • Compensation Ratio (Employee Compensation and Benefits / Net Revenues): 66.3% (2024) vs. 68.3% (2023).
  • Gross Profit Margin: 99.44%, Operating Profit Margin: 17.58%, Net Profit Margin: 13.94%.
  • Return on Assets (ROA): 10.01%, Return on Equity (ROE): 22.15%.
  • Current Ratio: 2.43, Quick Ratio: 2.43, Cash Ratio: 1.94.
  • Debt-to-Equity Ratio: 1.15, Debt-to-Assets Ratio: 0.53, Interest Coverage Ratio: 31.80.
  • Asset Turnover: 0.72.
  • Price-to-Earnings Ratio (P/E): 25.19, Price-to-Book Ratio (P/B): 5.58, Price-to-Sales Ratio (P/S): 3.18, Enterprise Value to EBITDA (EV/EBITDA): 15.64.
  • Revenue Growth: 22.67%, Net Income Growth: 46.46%, EPS Growth: 42.54%.
  • Total Number of Fees From Advisory and Underwriting Client Transactions increased by 12.31%.

Opportunities and Risks

  • Market Conditions: Unfavorable market conditions could reduce transaction volume and value, negatively impacting revenue.
  • Competition: Intense competition for advisory mandates and talent could lead to pricing pressures and difficulties in recruitment.
  • Conflicts of Interest: Failure to appropriately manage conflicts of interest could damage the company’s reputation and lead to litigation.
  • Cybersecurity: The company faces ongoing cybersecurity risks that could disrupt business operations and compromise sensitive information.
  • Organic Growth: Continued expansion of existing businesses and entry into new markets.
  • Strategic Recruitment: Attracting and retaining high-caliber professionals to enhance expertise and client coverage.
  • Investment Management: Achieving organic growth and improved profitability in the Investment Management segment.

Potential Implications

Company Performance

  • The company’s ability to maintain its compensation ratio while attracting top talent will be crucial for future success.
  • Continued expansion of existing businesses and entry into new markets can drive future growth.
  • Achieving organic growth and improved profitability in the Investment Management segment will be important.

Evercore Inc. (EVR) – Form 10-K Report for Fiscal Year Ended December 31, 2024

Executive Summary

This report analyzes Evercore Inc.’s Form 10-K filing for the fiscal year ended December 31, 2024. Evercore, a leading independent investment banking firm, demonstrated strong revenue growth driven by its Investment Banking & Equities segment. While compensation expenses increased, the company maintained a healthy compensation ratio. Key risks include market volatility, competition for talent, and potential conflicts of interest. Opportunities lie in continued organic growth, strategic recruitment, and expansion of the Investment Management segment. Overall, the assessment is cautiously optimistic, suggesting a “Hold” rating with a focus on monitoring market conditions and execution of growth strategies.

Company Overview

Evercore Inc. is a global independent investment banking advisory firm operating through two segments: Investment Banking & Equities and Investment Management. The Investment Banking & Equities segment provides strategic advisory, liability management, restructuring, and capital markets services. The Investment Management segment offers wealth management and trust services. The company’s success is heavily reliant on its senior professionals and their client relationships.

Detailed Analysis

Financial Statement Analysis

Revenue: Total revenues increased by 23% to $2.996 billion, driven by growth in Advisory Fees (up 24%) and Underwriting Fees (up 41%).

Expenses: Employee Compensation and Benefits increased by 19%, reflecting higher accruals for incentive compensation and new hires. Non-compensation expenses rose by 16%, primarily due to increased professional fees, travel, and IT costs.

Profitability: Net Income Attributable to Evercore Inc. increased by 48% to $378.3 million, resulting in diluted EPS of $9.08, a 43% increase.

Key Ratios:

  • Compensation Ratio (Employee Compensation and Benefits / Net Revenues): 66.3% (2024) vs. 68.3% (2023)

Management’s Discussion and Analysis (MD&A) Insights

Management attributes the revenue growth to increased transaction volume and value in the Investment Banking & Equities segment. They emphasize the importance of attracting and retaining top talent and strategically expanding into new sectors and geographies. The MD&A acknowledges the impact of market conditions on advisory fees and highlights the company’s efforts to diversify revenue streams.

Risk Factors

  • Market Conditions: Unfavorable market conditions could reduce transaction volume and value, negatively impacting revenue.
  • Competition: Intense competition for advisory mandates and talent could lead to pricing pressures and difficulties in recruitment.
  • Conflicts of Interest: Failure to appropriately manage conflicts of interest could damage the company’s reputation and lead to litigation.
  • Cybersecurity: The company faces ongoing cybersecurity risks that could disrupt business operations and compromise sensitive information.

Opportunities

  • Organic Growth: Continued expansion of existing businesses and entry into new markets.
  • Strategic Recruitment: Attracting and retaining high-caliber professionals to enhance expertise and client coverage.
  • Investment Management: Achieving organic growth and improved profitability in the Investment Management segment.

Uncommon Metrics

The filing highlights the number of fees from advisory and underwriting client transactions, providing insight into the volume of deals completed. The number of Senior Managing Directors (SMDs) is also tracked, reflecting the company’s focus on attracting and retaining top talent.

Conclusion & Actionable Insights

Evercore’s 2024 performance reflects a strong recovery in the investment banking sector. However, the company faces significant risks related to market volatility and competition. The company’s ability to maintain its compensation ratio while attracting top talent will be crucial for future success. The overall assessment is a “Hold,” with a recommendation to monitor market conditions, execution of growth strategies, and management of key risks.

Financial Ratio and Metric Analysis

Profitability

  • Gross Profit Margin:

    • Calculation: Net Revenues / Total Revenues = $2,979,593 / $2,996,361 = 99.44%
    • Trend: ($2,979,593 / $2,996,361) / ($2,425,949 / $2,442,666) – 1 = 2.12%
    • Industry: Investment banking firms typically have very high gross profit margins, often exceeding 90%, due to the nature of their business (primarily service-based). Evercore’s gross profit margin is in line with industry standards.
  • Operating Profit Margin:

    • Calculation: Operating Income / Total Revenues = $526,914 / $2,996,361 = 17.58%
    • Trend: ($526,914 / $2,996,361) / ($359,135 / $2,442,666) – 1 = 20.08%
    • Industry: Operating profit margins for investment banks can vary widely, but a healthy range is typically between 20% and 35%. Evercore’s operating margin is below this range.
  • Net Profit Margin:

    • Calculation: Net Income / Total Revenues = $417,737 / $2,996,361 = 13.94%
    • Trend: ($417,737 / $2,996,361) / ($285,223 / $2,442,666) – 1 = 18.24%
    • Industry: Net profit margins for investment banks typically range from 10% to 20%. Evercore’s net profit margin is within this range.
  • Return on Assets (ROA):

    • Calculation: Net Income / Total Assets = $417,737 / $4,173,971 = 10.01%
    • Industry: ROA for investment banks typically falls between 1% and 3%. Evercore’s ROA is significantly higher than the industry average.
  • Return on Equity (ROE):

    • Calculation: Net Income Attributable to Evercore Inc. / Total Evercore Inc. Stockholders’ Equity = $378,279 / $1,707,642 = 22.15%
    • Industry: ROE for investment banks typically ranges from 10% to 15%. Evercore’s ROE is significantly higher than the industry average.
  • Earnings Per Share (EPS) – Basic and Diluted:

    • Basic EPS: $9.86
    • Diluted EPS: $9.08
    • Trend: Basic EPS increased by 47% from $6.71 in 2023. Diluted EPS increased by 43% from $6.37 in 2023.
    • Industry: EPS varies widely based on the size and profitability of the firm. Evercore’s EPS is strong compared to smaller boutique investment banks.

Liquidity

  • Current Ratio:

    • Calculation: Total Current Assets / Total Current Liabilities = $2,987,901 / $1,229,801 = 2.43
    • Trend: ($2,987,901 / $1,229,801) / ($2,605,217 / $910,059) – 1 = 10.28%
    • Industry: A current ratio of 1.0 or greater is generally considered healthy. Evercore’s current ratio is strong, indicating good liquidity.
  • Quick Ratio (Acid-Test Ratio):

    • Calculation: (Total Current Assets – Inventory) / Total Current Liabilities. Since inventory is not listed, we will assume it is 0. $2,987,901 / $1,229,801 = 2.43
    • Trend: ($2,987,901 / $1,229,801) / ($2,605,217 / $910,059) – 1 = 10.28%
    • Industry: A quick ratio of 1.0 or greater is generally considered healthy. Evercore’s quick ratio is strong, indicating good liquidity.
  • Cash Ratio:

    • Calculation: (Cash and Cash Equivalents + Investment Securities) / Total Current Liabilities = ($873,045 + $1,519,381) / $1,229,801 = 1.94
    • Trend: (($873,045 + $1,519,381) / $1,229,801) / (($596,878 + $1,436,883) / $910,059) – 1 = 12.24%
    • Industry: A cash ratio above 0.5 is generally considered good. Evercore’s cash ratio is very strong, indicating a high degree of liquidity.

Solvency/Leverage

  • Debt-to-Equity Ratio:

    • Calculation: Total Liabilities / Total Equity = $2,232,163 / $1,941,808 = 1.15
    • Trend: ($2,232,163 / $1,941,808) / ($1,920,808 / $1,782,490) – 1 = 6.48%
    • Industry: Debt-to-equity ratios for investment banks can vary, but a ratio below 2.0 is generally considered acceptable. Evercore’s debt-to-equity ratio is relatively moderate.
  • Debt-to-Assets Ratio:

    • Calculation: Total Liabilities / Total Assets = $2,232,163 / $4,173,971 = 0.53
    • Trend: ($2,232,163 / $4,173,971) / ($1,920,808 / $3,703,298) – 1 = 3.84%
    • Industry: A debt-to-assets ratio below 0.6 is generally considered healthy. Evercore’s debt-to-assets ratio indicates a reasonable level of leverage.
  • Interest Coverage Ratio (Times Interest Earned):

    • Calculation: Income Before Income Taxes / Interest Expense = $533,145 / $16,768 = 31.80
    • Trend: ($533,145 / $16,768) / ($365,790 / $16,717) – 1 = 45.89%
    • Industry: An interest coverage ratio above 3.0 is generally considered good. Evercore’s interest coverage ratio is very strong, indicating a high ability to meet its interest obligations.

Activity/Efficiency

  • Asset Turnover:

    • Calculation: Total Revenues / Total Assets = $2,996,361 / $4,173,971 = 0.72
    • Trend: ($2,996,361 / $4,173,971) / ($2,442,666 / $3,703,298) – 1 = 8.03%
    • Industry: Asset turnover ratios for investment banks are typically below 1.0, as they are not asset-intensive businesses. Evercore’s asset turnover is within the expected range.

Valuation

  • Price-to-Earnings Ratio (P/E):

    • Calculation: Market Cap / Net Income Attributable to Evercore Inc.
      Market Cap = $250.13 * 38,116,350 = $9,534,120,355
      P/E = $9,534,120,355 / $378,279,000 = 25.19
    • Industry: The P/E ratio for financial services companies varies widely. A P/E ratio of 25.19 suggests that the market has a relatively high expectation for Evercore’s future earnings growth.
  • Price-to-Book Ratio (P/B):

    • Calculation: Market Cap / Total Evercore Inc. Stockholders’ Equity
      Market Cap = $250.13 * 38,116,350 = $9,534,120,355
      P/B = $9,534,120,355 / $1,707,642,000 = 5.58
    • Industry: A P/B ratio above 1.0 suggests that the market believes the company is worth more than its book value. Evercore’s P/B ratio is relatively high, indicating a premium valuation.
  • Price-to-Sales Ratio (P/S):

    • Calculation: Market Cap / Total Revenues
      Market Cap = $250.13 * 38,116,350 = $9,534,120,355
      P/S = $9,534,120,355 / $2,996,361,000 = 3.18
    • Industry: P/S ratios for investment banks typically range from 1 to 5. Evercore’s P/S ratio is within this range.
  • Enterprise Value to EBITDA (EV/EBITDA):

    • Calculation: (Market Cap + Total Debt – Cash) / EBITDA
      Market Cap = $250.13 * 38,116,350 = $9,534,120,355
      Total Debt = $335,944,000
      Cash = $873,045,000
      EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization = $417,737 + $16,768 + $115,408 + $24,468 = $574,391
      EV/EBITDA = ($9,534,120,355 + $335,944,000 – $873,045,000) / $574,391,000 = 15.64
    • Industry: EV/EBITDA multiples for financial services companies vary, but a range of 10-15 is common. Evercore’s EV/EBITDA is within this range.

Growth Rates

  • Revenue Growth:

    • Calculation: (2024 Revenue – 2023 Revenue) / 2023 Revenue = ($2,996,361 – $2,442,666) / $2,442,666 = 22.67%
  • Net Income Growth:

    • Calculation: (2024 Net Income – 2023 Net Income) / 2023 Net Income = ($417,737 – $285,223) / $285,223 = 46.46%
  • EPS Growth:

    • Calculation: (2024 Diluted EPS – 2023 Diluted EPS) / 2023 Diluted EPS = ($9.08 – $6.37) / $6.37 = 42.54%

Other Relevant Metrics

  • Total Number of Fees From Advisory and Underwriting Client Transactions:

    • 2024: 748
    • 2023: 666
    • Trend: (748 – 666) / 666 = 12.31% increase
  • Total Number of Fees of at Least $1 million from Advisory and Underwriting Client Transactions:

    • 2024: 457
    • 2023: 378
    • Trend: (457 – 378) / 378 = 20.89% increase

Commentary

Evercore demonstrated strong financial performance in 2024, marked by significant growth in revenue, net income, and EPS. The company’s profitability ratios, such as ROA and ROE, are notably higher than industry averages, indicating efficient asset utilization and strong returns to shareholders. Evercore maintains a healthy liquidity position, as evidenced by its robust current and cash ratios. While the debt-to-equity ratio has increased slightly, it remains within an acceptable range, and the company’s strong interest coverage ratio suggests a low risk of financial distress.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️