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Can Higher Research Revenues Drive Gartner (IT) Q4 Earnings?
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Information technology services provider Gartner, Inc. (IT - Free Report) is scheduled to report fourth-quarter 2017 results before the opening bell on Feb 6. The company’s Research segment, which accounts for nearly 79% of total revenues, is likely to report higher revenues due to improved demand for its products.
Whether this could result in higher earnings for the quarter remains to be seen.
Top-Line Improvement
With diligent execution of operational plans, Gartner has recorded double-digit growth in key metrics for more than a decade. In addition, this performance-driven firm has a strong cash flow and a healthy balance sheet position. It has a vast, untapped market opportunity worth an estimated $61 billion. The acquisition of CEB, an industry leader in providing best practice and talent management insights, further reinforces Gartner’s market strength. The combination of its analyst-driven, syndicated research and advisory services with CEB’s expertise is likely to provide a comprehensive and differentiated suite of services portfolio across the globe.
Gartner has a recurring revenue stream with 75% of its total revenues generated through subscription and long-term contracts. In addition, the company has a large and diverse addressable market with low customer concentration that mitigates operating risks. Operating in an industry with low barriers to entry, Gartner has an integrated research and consulting team designed to best serve client needs. This enables it to have a competitive advantage against its rivals. Leveraging its intellectual capital, Gartner creates and distributes proprietary research content as broadly as possible via published reports, interactive tools, facilitated peer networking, briefings, consulting and advisory services, and events. These facilitate a steady improvement in the company’s revenue stream.
The Zacks Consensus Estimate for the Research segment’s revenues is currently pegged at $721 million, up from $479 million reported in the year-ago quarter. Revenues from the Event segment are expected to be $169 million compared with reported revenues of $136 million in the year-earlier quarter. However, revenues from the Consulting segment are anticipated to be marginally down to $86 million from $88 million generated in the year-ago quarter.
Other Key Factors
Gartner is relatively immune to the vagaries of the market due to secular growth of information technology spend and its increasing market penetration rate. However, some of its services are cyclically sensitive. In addition, revenues from the federal government business are exposed to lengthy approval times and other austerity measures, which often increase operating risks. These factors undermine the long-term growth potential of the company to some extent.
Our proven model conclusively shows that Gartner is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and Zacks Consensus Estimate, is +0.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Gartner has a Zacks Rank #2. This increases the predictive power of ESP and makes us reasonably confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Zendesk, Inc. has an Earnings ESP of +9.91% and a Zacks Rank #3.
The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank #3.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Image: Bigstock
Can Higher Research Revenues Drive Gartner (IT) Q4 Earnings?
Information technology services provider Gartner, Inc. (IT - Free Report) is scheduled to report fourth-quarter 2017 results before the opening bell on Feb 6. The company’s Research segment, which accounts for nearly 79% of total revenues, is likely to report higher revenues due to improved demand for its products.
Whether this could result in higher earnings for the quarter remains to be seen.
Top-Line Improvement
With diligent execution of operational plans, Gartner has recorded double-digit growth in key metrics for more than a decade. In addition, this performance-driven firm has a strong cash flow and a healthy balance sheet position. It has a vast, untapped market opportunity worth an estimated $61 billion. The acquisition of CEB, an industry leader in providing best practice and talent management insights, further reinforces Gartner’s market strength. The combination of its analyst-driven, syndicated research and advisory services with CEB’s expertise is likely to provide a comprehensive and differentiated suite of services portfolio across the globe.
Gartner has a recurring revenue stream with 75% of its total revenues generated through subscription and long-term contracts. In addition, the company has a large and diverse addressable market with low customer concentration that mitigates operating risks. Operating in an industry with low barriers to entry, Gartner has an integrated research and consulting team designed to best serve client needs. This enables it to have a competitive advantage against its rivals. Leveraging its intellectual capital, Gartner creates and distributes proprietary research content as broadly as possible via published reports, interactive tools, facilitated peer networking, briefings, consulting and advisory services, and events. These facilitate a steady improvement in the company’s revenue stream.
The Zacks Consensus Estimate for the Research segment’s revenues is currently pegged at $721 million, up from $479 million reported in the year-ago quarter. Revenues from the Event segment are expected to be $169 million compared with reported revenues of $136 million in the year-earlier quarter. However, revenues from the Consulting segment are anticipated to be marginally down to $86 million from $88 million generated in the year-ago quarter.
Other Key Factors
Gartner is relatively immune to the vagaries of the market due to secular growth of information technology spend and its increasing market penetration rate. However, some of its services are cyclically sensitive. In addition, revenues from the federal government business are exposed to lengthy approval times and other austerity measures, which often increase operating risks. These factors undermine the long-term growth potential of the company to some extent.
Our proven model conclusively shows that Gartner is likely to beat earnings this quarter as it possesses the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is perfectly the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and Zacks Consensus Estimate, is +0.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Gartner, Inc. Price and EPS Surprise
Gartner, Inc. Price and EPS Surprise | Gartner, Inc. Quote
Zacks Rank: Gartner has a Zacks Rank #2. This increases the predictive power of ESP and makes us reasonably confident about an earnings surprise.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Zendesk, Inc. has an Earnings ESP of +9.91% and a Zacks Rank #3.
AmerisourceBergen Corporation has an Earnings ESP of +1.28% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank #3.
Breaking News: Cryptocurrencies Now Bigger than Visa
The total market cap of all cryptos recently surpassed $700 billion – more than a 3,800% increase in the previous 12 months. They’re now bigger than Morgan Stanley, Goldman Sachs and even Visa! The new asset class may expand even more rapidly in 2018 as new investors continue pouring in and Wall Street becomes increasingly involved.
Zacks’ has just named 4 companies that enable investors to take advantage of the explosive growth of cryptocurrencies via the stock market.
Click here to access these stocks >>