Investors with an interest in Financial - Investment Bank stocks have likely encountered both Evercore (EVR) and Robinhood Markets, Inc. (HOOD) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our ...

Core Viewpoint - Zacks Premium provides various tools and resources to help investors make informed stock market decisions and invest with confidence [1]. Group 1: Zacks Premium Features - Zacks Premium offers daily updates on Zacks Rank and Zacks Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens [1]. - The service includes Zacks Style Scores, which are indicators that assist investors in selecting stocks likely to outperform the market in the next 30 days [2][3]. Group 2: Zacks Style Scores - The Zacks Style Scores categorize stocks into four types: Value Score, Growth Score, Momentum Score, and VGM Score [4][5][6][7]. - Value Score focuses on identifying undervalued stocks using ratios like P/E, PEG, and Price/Sales [4]. - Growth Score emphasizes a company's financial health and future outlook based on projected and historical earnings, sales, and cash flow [5]. - Momentum Score is designed for traders looking to capitalize on price trends, utilizing factors like one-week price change and monthly earnings estimate changes [6]. - VGM Score combines the three Style Scores to identify stocks with attractive value, strong growth forecasts, and promising momentum [7]. Group 3: Zacks Rank and Style Scores Integration - The Zacks Rank is a proprietary model that uses earnings estimate revisions to help investors build successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.86% since 1988 [8]. - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for the highest likelihood of success [10]. - Stocks with lower ranks, even if they have good Style Scores, may still face downward price trends, indicating a higher risk of price decline [11]. Group 4: Company Spotlight - Evercore (EVR) - Evercore Inc. is a leading independent investment banking advisory firm with a Zacks Rank of 2 (Buy) and a VGM Score of A [12]. - The company has a Value Style Score of B, supported by a forward P/E ratio of 16.98, making it attractive to value investors [12]. - Recent upward revisions in earnings estimates for fiscal 2026 have increased the Zacks Consensus Estimate by $0.68 to $18.52 per share, with an average earnings surprise of +50.9% [13].

Core Viewpoint - Morgan Stanley and Evercore represent two distinct investment banking models, with Morgan Stanley combining advisory and capital markets strength with wealth management, while Evercore focuses on high-margin M&A and restructuring advice [1] Group 1: Morgan Stanley - Morgan Stanley's investment banking fees increased by 23% in 2025 and 35% in 2024, following a decline in 2023 and 2022, indicating a strong recovery in deal-making activity [2][9] - The company's trading business has performed well amid macroeconomic uncertainties, and is expected to continue growing due to decent market volatility and client activity [3] - Morgan Stanley's partnership with Mitsubishi UFJ Financial Group has strengthened its profitability, with Asia region revenues rising 23% year over year to $9.42 billion in 2025 [4] - The wealth and asset management segments contributed nearly 54% to total net revenues in 2025, up from 26% in 2010, with total client assets reaching $9.3 trillion [5] Group 2: Evercore - Evercore, while smaller, has established a significant presence in investment banking, with 97% of its revenues coming from Investment Banking and Equities in 2025 [6] - The company experienced a compound annual growth rate (CAGR) of 10.7% in its Investment Banking and Equities business from 2020 to 2025, supported by a recovery in global M&A activity [7] - Evercore is expanding its investment banking footprint by increasing staff and acquiring firms, such as the U.K.-based advisory firm Robey Warshaw, to enhance its presence in EMEA [8] Group 3: Financial Performance and Valuation - Morgan Stanley's 12-month forward P/E is 14.89X, while Evercore's is 15.88X, indicating that Morgan Stanley is trading at a discount [9][14] - Evercore's return on equity (ROE) stands at 32.01%, outperforming Morgan Stanley's 16.79%, suggesting greater efficiency in generating profits [15] - The Zacks Consensus Estimate for Morgan Stanley's revenues suggests a year-over-year increase of 6% and 4.8% for 2026 and 2027, respectively, while Evercore's estimates indicate a rise of 22.2% and 12.5% for the same years [17][20] Group 4: Investment Outlook - While Evercore shows faster projected growth, Morgan Stanley is viewed as a sturdier option for capital market recovery, benefiting from a strong trading franchise and diversified revenue streams [22][23] - Morgan Stanley's wealth and asset management platform provides durability across economic cycles, making it a favorable choice for investors seeking resilience and upside potential [23]

Revenue and Financial Performance - Total revenues from Investment Banking & Equities and Investment Management segments include fees for services, transaction-related client reimbursements, and other revenue, with net revenues reflecting total revenues less interest expense[169]. - Revenue trends in the advisory business are correlated to M&A activity, restructuring activity, and capital advisory activity, with fluctuations based on market conditions and client transaction completions[171]. - Net Revenues for 2025 were $3.86 billion, an increase of $876.2 million, or 29%, compared to $2.98 billion in 2024[199]. - Advisory Fees increased by $826.5 million, or 34%, to $3.27 billion in 2025, while Underwriting Fees rose by $22.6 million, or 14%[199]. - Net Revenues for 2025 were $3.77 billion, an increase of $869.2 million, or 30%, compared to $2.90 billion in 2024, driven primarily by a 34% increase in Advisory Fees[220]. - Total Number of Fees from Advisory and Underwriting Client Transactions increased to 806 in 2025, up 8% from 748 in 2024, with fees of at least $1 million rising by 16% to 529[219]. - The company recorded a net gain of $25.7 million from its exchange-traded funds portfolio for the year ended December 31, 2025[276]. Expenses - Total Expenses for 2025 were $3.07 billion, an increase of $613.2 million, or 25%, compared to $2.45 billion in 2024[202]. - Employee Compensation and Benefits Expense was $2.50 billion in 2025, reflecting a 27% increase from $1.97 billion in 2024[202]. - Non-Compensation Expenses were $565.0 million in 2025, up 20% from $471.3 million in 2024, driven by increased technology and information services costs[203]. - Interest Expense increased by $7.5 million, or 45%, to $24.3 million in 2025 due to the issuance of new senior notes[201]. - Non-Compensation expenses were $548.3 million in 2025, up 20% from $456.3 million in 2024, primarily due to increased technology and information services expenses[223]. Assets Under Management (AUM) and Wealth Management - Assets Under Management (AUM) in Wealth Management reached $15.5 billion at December 31, 2025, a 12% increase from $13.9 billion at December 31, 2024[231]. - Wealth Management experienced inflows of $1.583 billion and outflows of $1.344 billion in 2025, contributing to a market appreciation of $1.379 billion[234]. - The composition of AUM for Wealth Management as of December 31, 2025, included 67% in equities, 18% in fixed income, 10% in liquidity, and 5% in alternatives[234]. - Wealth Management lagged the S&P 500 by approximately 11% and 5% on a 1 and 3-year basis, respectively[236]. - Wealth Management AUM increased by 12% in 2025, driven by a 10% market appreciation and 2% net inflows[236]. Taxation and Deferred Tax Assets - The provision for income taxes in 2025 was $153.1 million, with an effective tax rate of 19.3%, down from 21.6% in 2024[206]. - The company estimates it must generate approximately $1.8 billion of future taxable income to realize the gross deferred tax asset balance of $446.9 million[321]. - The deferred tax balance is expected to reverse primarily over a period ranging from 5 to 15 taxable years[321]. - The majority of the deferred tax assets relate to the U.S. operations of the company, with management concluding that it is more-likely-than-not the deferred tax assets will be realized[320]. - Significant management judgment is required in determining the provision for income taxes and deferred tax assets and liabilities[316]. Compensation and Incentives - Employee Compensation and Benefits Expense rose to $52.4 million in 2025, a 14% increase from $46.1 million in 2024, due to higher salaries and incentive compensation[240]. - The company anticipates cash distributions to named executive officers in lieu of cash incentive compensation for 2023, 2024, and 2025, reflecting a strategic compensation approach[183]. - The performance period for the 2021 Long-term Incentive Plan ends on December 31, 2024, with cash distributions planned for 2025, indicating a structured incentive framework[185]. Investment and Financial Position - Cash, Cash Equivalents, and Restricted Cash increased to $1.4 billion at December 31, 2025, up $554 million from $882.1 million in 2024[245]. - Operating activities generated a net inflow of $1.3 billion in 2025, primarily related to earnings[245]. - Cash used in investing activities was $98.3 million in 2025, mainly for furniture, equipment, and investment securities[245]. - Financing activities used $635.6 million in cash, primarily for treasury stock purchases and dividend payments[245]. - The company issued $250.0 million in senior notes on July 24, 2025, including $125.0 million of 5.17% Series K Notes and $125.0 million of 5.47% Series L Notes[262]. Risk Management and Credit Quality - The company maintains an allowance for credit losses based on historical credit loss experience and current market conditions, ensuring adequate coverage for probable losses[306]. - The company does not believe it faces any material interest rate risk, foreign currency exchange risk, equity price risk, or other market risk except as disclosed[327]. - The company recorded bad debt expense of $5.6 million for the year ended December 31, 2025, consistent with the previous year, indicating stable credit loss management[306]. - Receivables collection periods are generally within 90 days of invoice, with placement fees collected within 180 days, indicating efficient cash flow management[307]. Accounting and Revenue Recognition - The company applies ASC 606 for revenue recognition, which includes a five-step model to ensure accurate reporting of revenue streams[292]. - Advisory fees are recognized upon the announcement or closing of transactions, which may lead to variability in revenue recognition timing[295]. - Asset management fees are recognized over the period services are provided, based on the value of assets under management, ensuring alignment with performance obligations[304]. - The valuation of investments in securities impacts both the carrying value of direct investments and the determination of management fees, highlighting the importance of fair value assessments[309].

Core Viewpoint - Evercore (EVR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the changing earnings picture of a company [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, largely due to institutional investors who adjust their valuations based on these estimates [4]. Business Outlook - The upgrade in Zacks Rank for Evercore suggests an improvement in the company's underlying business, which could lead to an increase in stock price as investors respond positively to this trend [5][10]. - Evercore is projected to earn $18.52 per share for the fiscal year ending December 2026, with a 1.6% increase in the Zacks Consensus Estimate over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks which have averaged a +25% annual return since 1988 [7]. - The upgrade of Evercore to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - BGC Group (BGC) is currently viewed as a superior value option compared to Evercore (EVR) based on various valuation metrics [7] Valuation Metrics - BGC has a forward P/E ratio of 6.80, while EVR has a forward P/E of 17.28 [5] - BGC's PEG ratio is 0.34, indicating a more favorable valuation in relation to its expected EPS growth compared to EVR's PEG ratio of 0.51 [5] - BGC's P/B ratio stands at 3.91, compared to EVR's P/B of 5.93, suggesting BGC is more undervalued relative to its book value [6] Earnings Outlook - Both BGC and EVR hold a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and an improving earnings outlook for both companies [3]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies and confidence [1] - The Zacks Style Scores are designed to help investors identify stocks with the potential to outperform the market in the short term [2] Zacks Style Scores Overview - The Style Scores consist of four categories: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] Value Score - The Value Style Score identifies stocks that are undervalued based on financial ratios such as P/E, PEG, Price/Sales, and Price/Cash Flow [3] Growth Score - The Growth Style Score assesses a company's financial health and future growth potential by analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Style Score focuses on stocks with upward or downward price trends, utilizing factors like one-week price changes and monthly earnings estimate changes [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors who utilize multiple investment strategies [6] Zacks Rank Integration - The Zacks Rank is a proprietary model that uses earnings estimate revisions to help investors build successful portfolios, with 1 (Strong Buy) stocks achieving an average annual return of +23.83% since 1988 [7] - There are typically over 800 top-rated stocks available, making it essential to use Style Scores to narrow down choices [8] Investment Strategy - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [9] - Stocks with lower ranks but high Style Scores may still face downward price trends due to negative earnings forecasts [10] Company Spotlight: Evercore (EVR) - Evercore Inc. is a leading independent investment banking advisory firm with a Zacks Rank of 3 (Hold) and a VGM Score of B [11] - The company is projected to have a year-over-year earnings growth of 27.2% for the current fiscal year, with upward revisions in earnings estimates [12] - Evercore's average earnings surprise stands at +50.9%, making it a strong candidate for growth investors [12]

Core Insights - Evercore Inc. (EVR) shares increased by 5.2% following the announcement of better-than-expected fourth-quarter results, with adjusted earnings per share (EPS) of $5.13, exceeding the Zacks Consensus Estimate of $3.83 and up from $3.41 in the prior-year quarter [1][10] Financial Performance - The fourth quarter of 2025 saw record adjusted net revenues of $1.29 billion, surpassing the Zacks Consensus Estimate by 22.2% and reflecting a year-over-year increase of 32.4% [4][10] - For the full year 2025, total revenues reached a record $3.88 billion, a 29.4% increase year over year, also exceeding the Zacks Consensus Estimate of $3.65 billion [4] - Net income attributable to common shareholders (GAAP basis) was $2.03 billion, up from $1.40 billion in the year-ago quarter [2] Segment Performance - Investment Banking & Equities segment reported net revenues of $1.26 billion, a 32.6% increase year over year, with operating income rising 46.3% to $304.5 million [6] - Investment Management segment generated net revenues of $23.5 million, up 10.1% from the prior-year quarter, with operating income increasing 70.9% year over year [7] Balance Sheet Strength - As of December 31, 2025, cash and cash equivalents stood at $1.4 billion, with current assets exceeding current liabilities by $2.1 billion [8] Capital Distribution - On February 3, 2026, the company declared a quarterly dividend of 84 cents per share, payable on March 13 to common stockholders of record as of February 27 [9] Expense Management - Total expenses increased by 27.9% year over year to $976.1 million, while the adjusted compensation ratio improved to 62% from 65.2% in the prior-year quarter [4][5]

Financial Data and Key Metrics Changes - In 2025, the company achieved record adjusted net revenue of approximately $3.9 billion, a 29% increase compared to the prior year, and nearly 17% above the previous record in 2021 [6][19] - The fourth quarter of 2025 marked the strongest revenue quarter in the company's history, with nearly $1.3 billion in adjusted net revenue, reflecting a 32% increase year-over-year [19] - Adjusted earnings per share for the full year reached $14.56, a 55% increase compared to 2024 [19][27] Business Line Data and Key Metrics Changes - Adjusted advisory fees for the fourth quarter exceeded $1.1 billion, up 33% year-over-year, and for the full year, they totaled $3.3 billion, a 34% increase compared to 2024 [20] - The underwriting fees for the fourth quarter were $49 million, an 87% increase from the previous year, while full-year underwriting revenues were $180 million, up 14% [20] - The wealth management business reached its highest quarter-end assets under management (AUM) of approximately $15.5 billion, marking a record year [15] Market Data and Key Metrics Changes - Global M&A activity rebounded significantly in 2025, with announced transactions totaling approximately $4.5 trillion, a 49% increase from the prior year [8] - Deal volumes in the second half of 2025 were approximately 45% higher than in the first half, indicating a shift in market sentiment [8] - The company ranked third for sell-side transactions in the U.S. based on dollar value and was the third-largest investment bank globally based on advisory fees [9] Company Strategy and Development Direction - The company continues to focus on diversifying its business model, with approximately 45% of revenues generated from non-M&A businesses [10] - Investments in talent and platform expansion are key strategic priorities, with the company hiring 19 senior managing directors in 2025, the largest class to date [11] - The acquisition of Robey Warshaw is part of the company's EMEA expansion strategy, with ongoing investments in key markets [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the continued momentum into 2026, citing strong backlogs and a healthy environment for both M&A and restructuring activities [16][32] - The company remains mindful of geopolitical and macroeconomic risks but believes its diversified business model positions it well for future growth [16] - Management highlighted the importance of delivering outstanding client service while continuing to invest in strategic growth opportunities [16] Other Important Information - The adjusted compensation ratio for the fourth quarter was 62%, down 320 basis points from the previous year, reflecting improved revenue and market conditions [22] - The company returned $812 million to shareholders in 2025, including $151 million in dividends and $661 million in share repurchases [27][28] - The adjusted tax rate for the full year was 19.8%, down from 21.8% in 2024, influenced by share price appreciation upon vesting of RSU grants [27] Q&A Session Summary Question: Outlook for large deals continuing or accelerating - Management believes the environment for large deals will remain healthy, supported by strong backlogs and favorable market conditions [31][32] Question: Can restructuring revenue grow in 2026? - Management expects both restructuring and M&A to coexist and remain strong, with high backlogs in both areas [34][35] Question: Growth expectations for non-M&A businesses - Management noted that non-M&A businesses have shown strong growth and are expected to continue performing well alongside M&A activities [48][50] Question: Impact of AI on advisory businesses - Management does not foresee significant disruption from AI in the near to medium term, citing a diversified business model [56][57] Question: Expectations for ECM in 2026 - Management is optimistic about the equity capital markets business, expecting continued growth and a healthy IPO environment [60][61] Question: Evolution of the compensation ratio - Management aims for continued improvement in the compensation ratio, though future reductions may not match past rates [64][66] Question: Conversations with sponsor clients - Management reported strong dialogues with sponsors, indicating growing momentum in the sponsor business [70][72] Question: Uptick in upper-middle market transactions - Management confirmed increased activity in the upper-middle market, with a diversified backlog reflecting this trend [76][77] Question: Competition in private capital advisory - Management acknowledged increased competition but expressed confidence in their established client relationships and service quality [79][80] Question: Capital allocation strategy for 2026 - Management plans to continue share repurchases and maintain a strong cash position while investing in growth initiatives [87][88] Question: Recruiting environment - Management noted a competitive recruiting environment, with increased difficulty in attracting talent but remains committed to aggressive recruiting efforts [90][91]

Financial Data and Key Metrics Changes - In 2025, the company achieved adjusted net revenue of approximately $3.9 billion, a 29% increase compared to the previous year, and nearly 17% above the previous record in 2021 [6][19] - The fourth quarter of 2025 marked the strongest revenue quarter in the company's history, with nearly $1.3 billion in adjusted net revenue, reflecting a 32% increase year-over-year [6][19] - Adjusted earnings per share for the full year reached approximately $14.56, a 55% increase compared to 2024 [6][19] Business Line Data and Key Metrics Changes - Adjusted advisory fees for the fourth quarter exceeded $1.1 billion, up 33% year-over-year, and for the full year, they totaled $3.3 billion, a 34% increase compared to 2024 [20] - The Private Capital Advisory (PCA) business delivered a record year, contributing significantly to the overall performance, with strong activity in GP-led continuation funds and LP transactions [15][50] - The Equities business also reported a record year, achieving nine consecutive quarters of year-over-year revenue growth [15] Market Data and Key Metrics Changes - Global M&A activity rebounded significantly in 2025, with announced transactions totaling approximately $4.5 trillion, a 49% increase from the prior year [8] - Deal volumes in the second half of 2025 were approximately 45% higher than in the first half, indicating a shift in market sentiment [8] - The company ranked third for sell-side transactions in the U.S. based on dollar value, reflecting its strong market position [9] Company Strategy and Development Direction - The company is focused on expanding its platform across regions, sectors, and products, including the acquisition of Robey Warshaw to enhance its EMEA strategy [11] - Continued investment in talent was emphasized, with the addition of 19 senior managing directors and a commitment to internal promotions [11] - The company aims to maintain a diversified revenue stream, with approximately 45% of revenues generated from non-M&A businesses [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2026, citing strong backlogs and a healthy environment for both M&A and restructuring activities [16][32] - The company remains mindful of geopolitical and macroeconomic risks but believes its strategic execution will continue to yield positive results [16] - Management highlighted the importance of maintaining strong client service while investing in growth opportunities [23] Other Important Information - The adjusted compensation ratio for the fourth quarter was 62%, down 320 basis points from the previous year, reflecting improved revenue performance [22] - The company returned $812 million to shareholders in 2025, including dividends and share repurchases, indicating a strong commitment to capital return [27][28] Q&A Session Summary Question: Outlook for large deals continuing or accelerating - Management believes the environment for large deals will remain healthy, supported by strong backlogs and favorable market conditions [32] Question: Can restructuring revenue grow in 2026? - Management is optimistic about the coexistence of strong restructuring and M&A activities, with high backlogs in both areas [34][35] Question: Growth expectations for non-M&A businesses - Management noted that non-M&A businesses, including Private Capital Advisory and Debt Advisory, are performing well and contributing significantly to overall growth [48][50] Question: Impact of AI on advisory businesses - Management does not foresee significant disruption from AI in the near term, citing a diversified business model that provides stability [57] Question: Expectations for ECM in 2026 - Management is optimistic about the Equity Capital Markets business, expecting continued growth and a healthy IPO environment [60][61] Question: Recruiting environment and challenges - Management acknowledged a competitive recruiting environment, indicating it may become more challenging and expensive to attract top talent [90][91]