It has been about a month since the last earnings report for Gartner (IT Quick QuoteIT - Free Report) . Shares have added about 10% 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 the most recent earnings report in order to get a better handle on the important drivers.

Gartner Surpasses Q3 Earnings & Revenue Estimates

Gartner reported better-than-expected third-quarter 2022 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate.

Adjusted earnings (excluding 24 cents from non-recurring items) per share of $2.41 beat the consensus mark by 30.3% and increased 18.7% year over year. Revenues of $1.33 billion beat the consensus estimate by 4.7% and improved 15.2% year over year on a reported basis and 20.4% on a foreign-currency-neutral basis.

Total contract value was $4.5 billion, up 14.5% year over year on a foreign-currency-neutral basis.

Quarterly Numbers in Detail

Revenues at the Research segment increased 10.7% year over year on a reported basis and 15.2% on a foreign-currency-neutral basis to $1.15 billion. Gross contribution margin was 73.9% in the reported quarter.

Revenues at the Conferences segment surged 215.5% year over year on a reported basis and 237% on a foreign-currency-neutral basis to $77 million. Gross contribution margin was at 52.3% in the reported quarter.

Revenues at the Consulting segment grew 13% year over year on a reported basis and 21.1% on a foreign-currency-neutral basis to $107 million. Gross contribution margin was 34.8% in the reported quarter.

Adjusted EBITDA of $332 million improved 8.5% year over year on a reported basis and 14.9% on a foreign-currency-neutral basis.

Operating cash flow totaled $315 million while free cash flow was $283 million in the reported quarter. Capital expenditures totaled $32 million. Gartner repurchased 0.4 million common shares for $97 million.

2022 View

Adjusted EPS is anticipated to be $10.06 (previous view: $8.85). 
Adjusted EBITDA is projected to be $1.36 billion (previous view: $1.235 billion). Free cash flow is anticipated to be 1,025 million (previous view: $985 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 19.83% due to these changes.

VGM Scores

Currently, Gartner has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, 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 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.

Performance of an Industry Player

Gartner is part of the Zacks Consulting Services industry. Over the past month, FTI Consulting (FCN Quick QuoteFCN - Free Report) , a stock from the same industry, has gained 10%. The company reported its results for the quarter ended September 2022 more than a month ago.

FTI Consulting reported revenues of $775.87 million in the last reported quarter, representing a year-over-year change of +10.5%. EPS of $2.15 for the same period compares with $2.02 a year ago.

For the current quarter, FTI Consulting is expected to post earnings of $1.34 per share, indicating a change of +18.6% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

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 C.