Gartner (IT) Up 6.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Gartner (IT). Shares have added about 6.7% 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 catalysts.
Gartner Surpasses Q2 Earnings & Revenue Estimates
Gartner reported better-than-expected second-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings per share of $2.24 beat the consensus mark by 28.7% and increased 86.7% year over year. Revenues of $1.17 billion beat the consensus estimate by 4.1% and improved 20% year over year on a reported basis and 15.9% on a foreign currency-neutral basis. Total contract value was $3.8 billion, up 10.7% year over year on a foreign currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 14.6% year over year on a reported basis and 10.7% on a foreign currency-neutral basis, to $1 billion. Gross contribution margin was 74% in the reported quarter. Revenues at the Conferences segment came in at $58 million. Gross contribution margin was 73.2% in the reported quarter. Revenues at the Consulting segment grew 8.6% year over year on a reported basis and 4.5% on a foreign currency-neutral basis, to $106 million. Gross contribution margin was 40.4% in the reported quarter.
Adjusted EBITDA of $355 million improved 84.9% year over year on a reported basis and 75.4% on a foreign currency-neutral basis. Operating cash flow totaled $575 million and free cash flow was $563 million in the reported quarter. Capital expenditures totaled $12 million. The company repurchased 3.1 million common shares for $685 million. Further, its board of directors raised the share repurchase authorization by $800 million in July 2021.
2021 View
Gartner raised its full-year 2021 guidance. The company now expects total revenues to be $4.57 billion compared with the prior guidance of $4.51 billion. Adjusted EPS is now anticipated to be $7.60 compared with the prior guidance of $6.25. Adjusted EBITDA is now projected to be $1.16 billion compared with the prior guidance of $1 billion. Free cash flow is now anticipated to be $1.13 billion compared with the prior guidance of $850 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 26.73% due to these changes.
VGM Scores
At this time, Gartner has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile 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.
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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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