The financial sector has enjoyed a strong upswing in the last two months, as investors anticipate a friendlier regulatory environment ahead. But when the fad for these stocks fades away, only the strong will survive.
Such companies as Morgan Stanley and State Street have been solid investments. But a lesser-known company, Evercore Partners, offers the prospect of even bigger returns. The company is coming off a stellar earnings and has a well-diversified business. Its range of businesses bodes well for future growth.
This is an opportunity that will guarantee your profits in 2017 and beyond. Evercore shares fell more than a percentage point in Monday trading.
Evercore's Investment Banking business advises its clients on mergers, acquisitions, restructurings, public offerings, and all other methods of raising capital. It also provides institutional investors with high-quality equity research, sales and trading execution that is free of the conflicts created by proprietary activities.
Meanwhile, Evercore's Investment Management business offers top-notch wealth management services to a diverse set of clients worldwide from 28 offices in North America, Europe, South America and Asia.
Evercore's third-quarter earnings report was as outstanding as you can find in any sector. Earnings per share for the quarter ended Sept. 30, soared by 394% year-over-year. Net revenues were $386.3 million for the quarter, an increase of more than 25% compared to the previous year.
The company also increased its quarterly dividend to 34 cents per share, the ninth straight year that the payout has been raised. The yield is now around 2%, and the firm has returned $204 million of capital to shareholders for the first nine months of 2016 through dividends and repurchases.
Those third-quarter numbers, along with similarly impressive year-to-date figures, demonstrate that clients globally are sold on Evercore's independent advisory business model. The company earned record advisory revenues in the first nine months, which were up 35% on an adjusted basis. Evercore ISI was ranked third worldwide in the Institutional Investor All-America Equity Research team rankings.
Evercore has performed strongly compared to both the overall market and its competitors in the banking and independent advisory firm areas. Its market share rose from 5.1% at the beginning of 2016 to 5.7% six months later, and management expects it to keep expanding.
A big factor in Evercore's growth was its acquisition of the ISI International Strategy & Investment firm, which substantially broadened Evercore's Investment Banking division. It can now provide fundamental research coverage of more than 600 companies across 12 industries, or approximately 60% of the combined market cap of the S&P 500. Its customers include some of the largest asset managers and fund complexes in the world.
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Tom Scarlett is an independent contributor who at the time of publication owned none of the stocks mentioned.