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Why Is Gartner (IT) Down 6.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Gartner (IT - Free Report) . Shares have lost about 6.5% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Gartner Surpasses Q4 Earnings & Revenue Estimates

Gartner reported better-than-expected fourth-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $2.99 beat the consensus mark by 21.5% and increased 88% year over year. Revenues of $1.31 billion beat the consensus estimate by 3.9% and improved 17% year over year on a reported basis and 18% on a foreign-currency-neutral basis.

Total contract value was $4.2 billion, up 16% year over year on a foreign-currency-neutral basis.

Quarterly Numbers in Detail

Revenues at the Research segment increased 17% year over year on a reported basis as well as on a foreign-currency-neutral basis, to $1.08 billion. Gross contribution margin was 74% in the reported quarter.

Revenues at the Conferences segment grew 15% year over year on a reported basis and 16% on a foreign-currency-neutral basis, to $107 million. Gross contribution margin was 61% in the reported quarter.

Revenues at the Consulting segment grew 26% year over year on a reported basis and 27% on a foreign-currency-neutral basis, to $118 million. Gross contribution margin was 39% in the reported quarter.

Adjusted EBITDA of $307 million improved 25% year over year on a reported basis and 26% on a foreign-currency-neutral basis.

Operating cash flow totaled $235 million and free cash flow was $214 million in the reported quarter. Capital expenditures totaled $21 million. The company repurchased 0.6 million common shares for $217 million.

2022 View

Gartner unveiled its full-year 2022 guidance. The company expects total revenues to be $5.18 billion. Adjusted EPS is anticipated to be $6.74. Adjusted EBITDA is projected to be $1.04 billion. Free cash flow is anticipated to be $850 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

The consensus estimate has shifted 19.75% due to these changes.

VGM Scores

At this time, Gartner has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. Notably, Gartner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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