Evercore Inc. (EVR) stock intrinsic value fair value estimate & owner earnings analysis

Evercore is an independent investment bank. Most of its revenue comes from advising companies, boards and private-equity sponsors on mergers, acquisitions, restructurings and capital raising. A smaller Equities business (Evercore ISI research and trading) and a small investment management arm make up the rest. Evercore does not lend its own balance sheet. What it sells is the advice of its senior bankers, so its main cost is pay: employee compensation took 64.9% of net revenues in 2025. Net revenues were $3.86 billion in 2025, up from $1.44 billion in 2016. About 76% of 2025 revenue came from clients in the United States, 17% from Europe, the Middle East and Africa (mostly the United Kingdom), 5% from the rest of the Americas and 2% from Asia-Pacific. How we measured earnings. We use the cash the business generates for shareholders after everything needed to keep it running. That is net income plus non-cash charges, minus the stock and deferred pay awarded to employees, minus the upkeep spending on offices and equipment. We count employee awards as a full cost, even though the cash flow statement adds them back. Three accounting judgements matter. First, we do not add back the non-cash lease charge, because rent is a real cost. Second, we keep interest earned on Treasury bills as income. Third, partners who hold Evercore LP units are not counted in the diluted share count, so we give common shareholders only their share of earnings (92% in 2025). On that basis, earnings per share were $2.96 in 2016, $4.35 in 2017, $8.52 in 2018, $5.80 in 2019, $8.61 in 2020, $17.56 in 2021, $12.14 in 2022, $5.62 in 2023, $8.75 in 2024 and $13.24 in 2025. The swings follow the deal cycle. 2021 was a record year for mergers. In the 2023 drought, revenue fell to $2.43 billion and pay could not be cut as fast, so earnings halved. Starting point. Because the business is cyclical, we start from the middle of a full cycle rather than from the latest year. The median of 2020 to 2025 is about $10.45 a share. That span covers the 2021 boom, the 2023 bust and the 2025 recovery. Earlier years describe a much smaller firm. The first half of 2026 was very strong, with net revenues of $2.38 billion against $1.53 billion a year earlier. We give 2026 credit for the roughly $10 a share already earned in that half, but we do not assume the second half repeats it. Base case (about $275 a share). 2026 earnings are about $15: the first half's roughly $10 plus a normal second half. From there, the mid-cycle level of $10.45 grows 7% a year for ten years. That is slower than the firm's actual record: net revenues grew about 11.6% a year from 2016 to 2025, while diluted shares fell from 44.2 million to 42.1 million. The hiring behind that growth is visible in the filings. In 2025 Evercore added 18 senior managing directors in investment banking, five of them through its July 2025 purchase of the London advisory boutique Robey Warshaw. It also promoted 11 of its own bankers to that rank, signed four more to join in 2026, and promoted eight more in January 2026. After year 10, growth slows to 3% a year through year 20, and earnings stay flat for years 21 to 30. We stop at 30 years. Evercore has operated for about three decades and has rebuilt its earnings after every downturn, but its main asset is people who can leave, so we do not assume the franchise lasts longer than that. Bear case (about $118 a share). Here earning power falls back to the 2018 to 2025 median of about $8.68. The reason is that pay has taken a growing share of revenue: about 58% in 2018 against 65% to 68% in 2023 to 2025, as large banks and other boutiques compete for the same senior bankers. 2026 still keeps its strong first half and comes in at about $13. After that, earnings grow only 2% a year for ten years, as new senior hires do little more than replace departures. They stay flat for the next ten years, and the case ends after year 20. Evercore carries little debt: roughly $580 million of senior notes at the end of 2025, against $1.43 billion of cash plus investment securities. Borrowing therefore does not make this case worse. Bull case (about $440 a share). Earning power sits nearer the 2021 to 2025 median of about $12.14. 2026 reaches about $19 as the second half matches the first. Growth then runs 10% a year for ten years, in line with the firm's revenue record. It slows to 5% a year for the following ten years and stays flat for ten after that. We discount all three cases at 6% a year. Our estimate of value is about $275 a share, and the margin-of-safety price is around $155. That lower price allows for how cyclical the business is and for how much of its value depends on keeping its bankers. What could make this wrong. The value rests on keeping senior bankers. A wave of departures, or pay rising further as a share of revenue, would do more damage than one weak year for deals. A long slump in mergers would cut near-term earnings. The last one lasted about two years (2022 to 2023), and that kind of slump is already reflected in the cycle median. The Robey Warshaw deal includes deferred and contingent payments to the sellers, which the company records as pay; our earnings figures include them as a cost.