Evercore (NYSE: EVR), my contribution to InvestorPlace’s 2011 Top 10 Stocks, reported full-year and fourth-quarter results on Wednesday, and I really like what this company is doing. The stock remains one of my favorites in my GameChangers investing service.
Let’s start with a quick look at the numbers. Last year was one of tremendous progress as Evercore earned $8.8 million, up sharply from 2009’s loss of $1.6 million. For the quarter, profits more than doubled from a year ago to $3.27 million. Evercore earned $0.27 a share, easily beating the Street’s expectations of $0.24. That’s actually down from the same time last year when company earned $0.41 per share, but in this instance, it’s for good reasons.
Revenues in the investment banking group fell over 20% because Evercore had higher costs than the year before as it built out its institutional equity business. The investment is paying off. Evercore has launched coverage on over 100 companies and now has more than 75 clients. That may not sound like big numbers, but having spent the last 25 years on the Street, I can tell you that’s an impressive start.
There was important news from Evercore’s asset management division, which became profitable for the first time. Revenues increased 12%. This could be a big deal over time. Remember, firms like Evercore make their money both from a percentage of assets under management and performance fees. A positive market environment can provide real leverage for EVR.
M&A Expectations Remain High
The main reason I recommend EVR is that it’s an emerging powerhouse in mergers and acquisitions (M&A) and initial public offerings (IPOs). In 2010, Evercore advised on 38 transactions – including the General Motors (NYSE: GM) IPO, the largest ever in the U.S. – up from 32 the year before. This year should be even better.
Roger Altman, the executive chairman and former U.S. Deputy Secretary of the Treasury, said that the number of transactions in both the U.S. and around the world “continued to accelerate in Q4 and is expected to continue in 2011.” In fact, two deals worth more than $600 million that were suppose to close in December slipped into the current quarter, and the company still beat estimates.
Altman and Ralph Schlosstein, Evercore’s CEO and a legendary dealmaker on Wall Street, lead a very smart management team. They have been aggressively hiring talented bankers from firms that were bailed out by the government and are therefore restricted in what they can pay employees.
Investors liked what they heard as the stock popped 9% the day earnings were released, and I think that’s a sign of what’s to come. I am more convinced than ever that Evercore is a stock you should own here in 2011.
Check out the other FREE stock picks that make up InvestorPlace.com’s Top 10 Stocks for 2011.
As of this writing, Hilary Kramer was recommending Evercore to subscribers of her GameChangers newsletter.
