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Gartner (IT) Gains on Robust Revenue Stream, Competition Rife
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Gartner, Inc. (IT - Free Report) offers timely and comprehensive analysis that is known for its quality, independence and objectivity. The company’s research reports have become indispensable tools for diverse companies across different sectors.
The Connecticut-based outsourcing firm delivered impressive second-quarter 2018 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings per share (EPS) of $1.03 beat the consensus mark by 6 cents and surged 17% on a year-over-year basis. Total revenues of $1 billion outpaced the consensus estimate by $15 million and improved 19% year over year.
Gartner’s surprise history looks impressive. It beat estimates in three of the trailing four quarters, with an average beat of 11.7%. So far this year, shares of Gartner have gained 17.9% compared with the industry’s rise of 10.6%.
Steadily Improving Revenue Stream
Leveraging the breadth and depth of its intellectual capital, Gartner creates and distributes proprietary research content as broadly as possible via published reports, interactive tools, facilitated peer networking, briefings, consulting as well as advisory services and events. These facilitate a steadily improving revenue stream for the company. It has a large and diverse addressable market with low customer concentration that mitigates operating risks. The company has an integrated research and consulting team designed to serve clients efficiently. This provides the company a competitive advantage over rivals.
Gartner utilizes advanced technologies to collect and analyze troves of data and draws on unique data assets and deep domain expertise to provide key insights along with decision support solutions for informed decision-making process. CEB’s buyout further emphasizes the company’s strong foothold in the market. The company’s analyst-driven, syndicated research and services combined with CEB’s best practice and talent management insights across a range of business functions provides a comprehensive as well as differentiated suite of services portfolio across the globe.
Risks
Gartner faces stiff competition from other players in the market that is characterized by limited barriers to entry. To retain a competitive edge and resist competition, the company needs to make continuous investments in value drivers that will raise operating costs and put pressure on margins.
Further, although Gartner is widely viewed as a secular growth company, some of its services are cyclically sensitive. Additionally, revenues from the federal government business are exposed to lengthy approval durations and austerity measures, which often raise operating risks. These factors undermine the long-term growth potential of the company to some extent.
The long-term expected EPS (three to five years) growth rate for Broadridge, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Gartner (IT) Gains on Robust Revenue Stream, Competition Rife
Gartner, Inc. (IT - Free Report) offers timely and comprehensive analysis that is known for its quality, independence and objectivity. The company’s research reports have become indispensable tools for diverse companies across different sectors.
The Connecticut-based outsourcing firm delivered impressive second-quarter 2018 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings per share (EPS) of $1.03 beat the consensus mark by 6 cents and surged 17% on a year-over-year basis. Total revenues of $1 billion outpaced the consensus estimate by $15 million and improved 19% year over year.
Gartner’s surprise history looks impressive. It beat estimates in three of the trailing four quarters, with an average beat of 11.7%. So far this year, shares of Gartner have gained 17.9% compared with the industry’s rise of 10.6%.
Steadily Improving Revenue Stream
Leveraging the breadth and depth of its intellectual capital, Gartner creates and distributes proprietary research content as broadly as possible via published reports, interactive tools, facilitated peer networking, briefings, consulting as well as advisory services and events. These facilitate a steadily improving revenue stream for the company. It has a large and diverse addressable market with low customer concentration that mitigates operating risks. The company has an integrated research and consulting team designed to serve clients efficiently. This provides the company a competitive advantage over rivals.
Gartner, Inc. Revenue (TTM)
Gartner, Inc. Revenue (TTM) | Gartner, Inc. Quote
Technological Advancement
Gartner utilizes advanced technologies to collect and analyze troves of data and draws on unique data assets and deep domain expertise to provide key insights along with decision support solutions for informed decision-making process. CEB’s buyout further emphasizes the company’s strong foothold in the market. The company’s analyst-driven, syndicated research and services combined with CEB’s best practice and talent management insights across a range of business functions provides a comprehensive as well as differentiated suite of services portfolio across the globe.
Gartner faces stiff competition from other players in the market that is characterized by limited barriers to entry. To retain a competitive edge and resist competition, the company needs to make continuous investments in value drivers that will raise operating costs and put pressure on margins.
Further, although Gartner is widely viewed as a secular growth company, some of its services are cyclically sensitive. Additionally, revenues from the federal government business are exposed to lengthy approval durations and austerity measures, which often raise operating risks. These factors undermine the long-term growth potential of the company to some extent.
Zacks Rank & Key Picks
Currently, Gartner carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Business Services Sector include Broadridge Financial Solutions, Inc. (BR - Free Report) , WEX Inc. (WEX - Free Report) and Total System Services, Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected EPS (three to five years) growth rate for Broadridge, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>