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Gartner (IT) Up 8.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Gartner (IT - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gartner due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Gartner reported better-than-expected third-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of 91 cents beat the consensus mark by 78.4% and increased 30% year over year. Revenues of $995 million beat the consensus estimate by 6.4% but declined 0.6% year over year on a reported basis and 1% on a foreign currency-neutral basis.
Total contract value was $3.4 billion, up 5.3% year over year on a foreign currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 6.2% year over year on a reported basis and 5.8% on a foreign currency-neutral basis to $893 million. Gross contribution margin was 72% in the reported quarter.
Revenues at the Conferences segment declined 80.8% year over year on a reported basis and 81.1% on a foreign currency-neutral basis to $13 million. Gross contribution margin was 16% in the reported quarter.
Revenues at the Consulting segment declined 4.4% year over year on a reported basis and 5.6% on a foreign currency-neutral basis to $89 million. Gross contribution margin was 31.6% in the reported quarter.
Adjusted EBITDA of $168 million improved 20% year over year on a reported basis and 19.4% on a foreign currency-neutral basis.
Operating cash flow totaled $244 million and free cash flow was $229 million in the reported quarter. Capital expenditures totaled $15 million.
2020 View
Gartner raised its full-year 2020 guidance. The company now expects total revenues to be $4.05 billion compared with the prior guidance of $3.88 billion.
Adjusted EPS is anticipated to be $4.07 compared with the prior guidance of $3.08.
Adjusted EBITDA is projected to be $740 million compared with the prior guidance of $635 million. Free cash flow is anticipated to be $625 million compared with the prior guidance of $425 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 166.88% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Gartner has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Gartner (IT) Up 8.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Gartner (IT - Free Report) . Shares have added about 8.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Gartner due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Gartner Beats Q3 Earnings Estimates, Raises 2020 View
Gartner reported better-than-expected third-quarter 2020 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of 91 cents beat the consensus mark by 78.4% and increased 30% year over year. Revenues of $995 million beat the consensus estimate by 6.4% but declined 0.6% year over year on a reported basis and 1% on a foreign currency-neutral basis.
Total contract value was $3.4 billion, up 5.3% year over year on a foreign currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 6.2% year over year on a reported basis and 5.8% on a foreign currency-neutral basis to $893 million. Gross contribution margin was 72% in the reported quarter.
Revenues at the Conferences segment declined 80.8% year over year on a reported basis and 81.1% on a foreign currency-neutral basis to $13 million. Gross contribution margin was 16% in the reported quarter.
Revenues at the Consulting segment declined 4.4% year over year on a reported basis and 5.6% on a foreign currency-neutral basis to $89 million. Gross contribution margin was 31.6% in the reported quarter.
Adjusted EBITDA of $168 million improved 20% year over year on a reported basis and 19.4% on a foreign currency-neutral basis.
Operating cash flow totaled $244 million and free cash flow was $229 million in the reported quarter. Capital expenditures totaled $15 million.
2020 View
Gartner raised its full-year 2020 guidance. The company now expects total revenues to be $4.05 billion compared with the prior guidance of $3.88 billion.
Adjusted EPS is anticipated to be $4.07 compared with the prior guidance of $3.08.
Adjusted EBITDA is projected to be $740 million compared with the prior guidance of $635 million. Free cash flow is anticipated to be $625 million compared with the prior guidance of $425 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 166.88% 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Gartner has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.