Over the past six months, Evercore’s shares (currently trading at $275.48) have posted a disappointing 18.5% loss while the S&P 500 was flat. This might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for EVR? Find out in our full research report, it’s free.
Why Is Evercore a Good Business?
Founded in 1995 as a boutique advisory firm focused on independence and client trust, Evercore (NYSE: EVR) is an independent investment banking firm that provides strategic advisory, capital markets, and wealth management services to corporations, financial sponsors, and high-net-worth individuals.
1. Long-Term Revenue Growth Shows Momentum
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
Over the last five years, Evercore grew its revenue at a decent 10.8% compounded annual growth rate. Its growth was slightly above the average financials company and shows its offerings resonate with customers.
2. EPS Surges Higher Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Evercore’s EPS grew at an astounding 50.2% compounded annual growth rate over the last two years, higher than its 25.9% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROE Showcases Lucrative Growth Opportunities
Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.
Over the last five years, Evercore has averaged an ROE of 32.8%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This shows Evercore has a strong competitive moat.
Final Judgment
These are just a few reasons why we think Evercore is a great business. After the recent drawdown, the stock trades at 15.1× forward P/E (or $275.48 per share). Is now the right time to buy? See for yourself in our full research report, it’s free.
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