It has been about a month since the last earnings report for Gartner (IT - Free Report) . Shares have added about 0.5% 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 Beats on Q1 Earnings and Revenues
Gartner first-quarter 2019 adjusted earnings of 58 cents per share surpassed the Zacks Consensus Estimate by 5 cents but decreased 19% on a year-over-year basis. Earnings exceeded the guided adjusted EPS range of 50-54 cents.
Revenues of $970.44 million beat the consensus estimate of $970 million. The top line improved 1% year over year on a reported basis and 4% on a foreign currency-neutral basis. Adjusted revenues improved 8% year over year on a reported basis and 11% on a foreign currency-neutral basis. Total contract value was $3.1 billion, up 11% year over year on a foreign currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 8% year over year on a reported basis and 11% on a foreign currency-neutral basis to $825 million. Gross contribution margin was 70% in the reported quarter. Revenues at the Conferences segment increased 13% year over year on a reported basis and 17% on a foreign currency-neutral basis to $52 million. Gross contribution margin was 36%. Revenues at the Consulting segment grew 12% year over year on a reported basis and 16% on a foreign currency-neutral basis to $93 million. Gross contribution margin was 31% in the reported quarter.
Adjusted EBITDA of $142 million decreased 2% year over year on reported basis and was flat on a foreign currency-neutral basis. Operating cash flow totaled $36 million and free cash flow was $35 million in the reported quarter. Capital expenditures came in at $20 million.
Gartner reaffirmed its full-year 2019 guidance. The company projects revenues in the range of $4.22-$4.32 billion. Adjusted EPS is anticipated in the range of $3.82-$4.19. Adjusted EBITDA is projected in the range of $720-$765 million. Operating cash flow is anticipated between $542 million and $582 million while free cash flow is expected in the range of $455-$485 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
At this time, Gartner has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Gartner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.