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Gartner (IT) Down 2.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Gartner (IT - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gartner due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Gartner Surpasses Q3 Earnings and Revenue Estimates
The company’s adjusted earnings per share of $2.5 beat the Zacks Consensus Estimate by 2% but decreased 2.3% from the year-ago quarter. Revenues of $1.5 billion beat the consensus estimate marginally and improved 5.4% year over year.
Gartner’s Revenues by Segments
Revenues in the Research segment were $1.3 billion, which grew 5.1% from the year-ago quarter on a reported basis and 5.4% on a foreign-currency-neutral basis. The gross contribution margin was 73.7%, which amounted to a gross contribution of $943 million in the third quarter of 2024.
Conferences’ revenues were $76 million, which increased 32.5% year over year on a reported basis and 30.5% on a foreign-currency-neutral basis. The gross contribution margin was 40.2%, which logged a gross contribution of $30 million.
Revenues in the Consulting segment amounted to $128 million, which decreased 3.9% from the year-ago quarter on a reported basis and 3.7% on a foreign-currency-neutral basis. The gross contribution margin was 32.5% in the reported quarter, which amounted to a gross contribution of $42 million.
Gartner’s Operating Performance
Adjusted EBITDA of $340 million increased 2.1% from the year-ago quarter on a reported basis and 2.8% on a foreign-currency-neutral basis.
Balance Sheet & Cash Flow of IT
Gartner had $1.8 billion in cash and cash equivalents at the end of the quarter compared with $1.2 billion at the end of the preceding quarter. The long-term debt was $2.5 billion, flat with the second quarter of 2024.
The operating cash flow totaled $591 million and the free cash flow utilized was $565 million in the reported quarter. Capital expenditure totaled $26 million.
Gartner’s 2024 Outlook
For 2024, total revenues are expected to be at least $6.23 billion. IT raised the guidance for adjusted earnings per share to at least $11.75 compared with the $11.05 provided in the preceding quarter. The adjusted EBITDA guidance is raised to at least $1.52 billion from the $1.46 billion given in the previous quarter. The free cash flow guidance is raised to at least $1.35 billion from the $1.08 billion provided in the preceding quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.06% due to these changes.
VGM Scores
At this time, Gartner has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Gartner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Gartner is part of the Zacks Consulting Services industry. Over the past month, FTI Consulting (FCN - Free Report) , a stock from the same industry, has gained 2%. The company reported its results for the quarter ended September 2024 more than a month ago.
FTI Consulting reported revenues of $926.02 million in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $1.85 for the same period compares with $2.34 a year ago.
FTI Consulting is expected to post earnings of $1.67 per share for the current quarter, representing a year-over-year change of -26.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
FTI Consulting has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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Gartner (IT) Down 2.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Gartner (IT - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gartner due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Gartner Surpasses Q3 Earnings and Revenue Estimates
Gartner reported better-than-expected third-quarter 2024 results.
The company’s adjusted earnings per share of $2.5 beat the Zacks Consensus Estimate by 2% but decreased 2.3% from the year-ago quarter. Revenues of $1.5 billion beat the consensus estimate marginally and improved 5.4% year over year.
Gartner’s Revenues by Segments
Revenues in the Research segment were $1.3 billion, which grew 5.1% from the year-ago quarter on a reported basis and 5.4% on a foreign-currency-neutral basis. The gross contribution margin was 73.7%, which amounted to a gross contribution of $943 million in the third quarter of 2024.
Conferences’ revenues were $76 million, which increased 32.5% year over year on a reported basis and 30.5% on a foreign-currency-neutral basis. The gross contribution margin was 40.2%, which logged a gross contribution of $30 million.
Revenues in the Consulting segment amounted to $128 million, which decreased 3.9% from the year-ago quarter on a reported basis and 3.7% on a foreign-currency-neutral basis. The gross contribution margin was 32.5% in the reported quarter, which amounted to a gross contribution of $42 million.
Gartner’s Operating Performance
Adjusted EBITDA of $340 million increased 2.1% from the year-ago quarter on a reported basis and 2.8% on a foreign-currency-neutral basis.
Balance Sheet & Cash Flow of IT
Gartner had $1.8 billion in cash and cash equivalents at the end of the quarter compared with $1.2 billion at the end of the preceding quarter. The long-term debt was $2.5 billion, flat with the second quarter of 2024.
The operating cash flow totaled $591 million and the free cash flow utilized was $565 million in the reported quarter. Capital expenditure totaled $26 million.
Gartner’s 2024 Outlook
For 2024, total revenues are expected to be at least $6.23 billion. IT raised the guidance for adjusted earnings per share to at least $11.75 compared with the $11.05 provided in the preceding quarter. The adjusted EBITDA guidance is raised to at least $1.52 billion from the $1.46 billion given in the previous quarter. The free cash flow guidance is raised to at least $1.35 billion from the $1.08 billion provided in the preceding quarter.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 6.06% due to these changes.
VGM Scores
At this time, Gartner has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Gartner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Gartner is part of the Zacks Consulting Services industry. Over the past month, FTI Consulting (FCN - Free Report) , a stock from the same industry, has gained 2%. The company reported its results for the quarter ended September 2024 more than a month ago.
FTI Consulting reported revenues of $926.02 million in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $1.85 for the same period compares with $2.34 a year ago.
FTI Consulting is expected to post earnings of $1.67 per share for the current quarter, representing a year-over-year change of -26.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
FTI Consulting has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.