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Why Is Gartner (IT) Up 9% 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 added about 9% in that time frame, underperforming 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 Surpasses Q1 Earnings Estimates, Revenues Lag
Gartner reported mixed first-quarter 2020 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings per share of $1.20 beat the consensus mark and increased year over year more than 100%.
Revenues of $1.01 billion missed the consensus estimate by 1.6% but improved 5% year over year on a reported basis and 6.1% on a foreign currency-neutral basis.
Total contract value was $3.5 billion, up 10.6% year over year on a foreign currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 10.2% year over year on a reported basis and 11.3% on a foreign currency-neutral basis to $909 million. Gross contribution margin was 71.9% in the reported quarter.
Revenues at the Conferences segment decreased 73.3% year over year on a reported basis and 72.7% on a foreign currency-neutral basis to $14 million.
Revenues at the Consulting segment grew 2.8% year over year on a reported basis and 3.8% on a foreign currency-neutral basis to $96 million. Gross contribution margin was 30.7% in the reported quarter.
Adjusted EBITDA of $214 million improved 50.8% year over year on a reported basis and 52.8% on a foreign currency-neutral basis.
Operating cash flow totaled $56 million and free cash flow was $31 million in the reported quarter. Capital expenditures totaled $25 million.
2020 View
Gartner lowered its full-year 2020 guidance. The company now expects total revenues to be $3.81 billion compared with the prior guidance of $4.63 billion. Adjusted EPS is anticipated to be $3.00 compared with the prior guidance of $4.06. Adjusted EBITDA is projected to be $625 million compared with the prior guidance of $745 million. Free cash flow is anticipated to be $300 million compared with the prior guidance of $505 million.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a flat path over the past two months.
VGM Scores
Currently, Gartner has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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
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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Why Is Gartner (IT) Up 9% Since Last Earnings Report?
A month has gone by since the last earnings report for Gartner (IT - Free Report) . Shares have added about 9% in that time frame, underperforming 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 Surpasses Q1 Earnings Estimates, Revenues Lag
Gartner reported mixed first-quarter 2020 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings per share of $1.20 beat the consensus mark and increased year over year more than 100%.
Revenues of $1.01 billion missed the consensus estimate by 1.6% but improved 5% year over year on a reported basis and 6.1% on a foreign currency-neutral basis.
Total contract value was $3.5 billion, up 10.6% year over year on a foreign currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 10.2% year over year on a reported basis and 11.3% on a foreign currency-neutral basis to $909 million. Gross contribution margin was 71.9% in the reported quarter.
Revenues at the Conferences segment decreased 73.3% year over year on a reported basis and 72.7% on a foreign currency-neutral basis to $14 million.
Revenues at the Consulting segment grew 2.8% year over year on a reported basis and 3.8% on a foreign currency-neutral basis to $96 million. Gross contribution margin was 30.7% in the reported quarter.
Adjusted EBITDA of $214 million improved 50.8% year over year on a reported basis and 52.8% on a foreign currency-neutral basis.
Operating cash flow totaled $56 million and free cash flow was $31 million in the reported quarter. Capital expenditures totaled $25 million.
2020 View
Gartner lowered its full-year 2020 guidance. The company now expects total revenues to be $3.81 billion compared with the prior guidance of $4.63 billion. Adjusted EPS is anticipated to be $3.00 compared with the prior guidance of $4.06. Adjusted EBITDA is projected to be $625 million compared with the prior guidance of $745 million. Free cash flow is anticipated to be $300 million compared with the prior guidance of $505 million.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a flat path over the past two months.
VGM Scores
Currently, Gartner has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, 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
Gartner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.