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Gartner (IT) Beats Q2 Earnings Estimates, Revises '19 View

Zacks Equity Research

Gartner, Inc. IT reported mixed second-quarter 2019 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings per share of $1.45 beat the consensus mark by 27 cents and increased 40.7% on a year-over-year basis. Earnings exceeded the guided adjusted EPS range of $1.15-$1.20.

Revenues of $1.07 billion however lagged the consensus estimate by $6.8 million but improved 7% year over year on a reported basis and 9% on a foreign currency-neutral basis. Adjusted revenues improved 9% year over year on a reported basis and 12% on a foreign currency-neutral basis.

Total contract value was $3.2 billion, up 11% year over year on a foreign currency-neutral basis.

So far this year, shares of Gartner have gained 33.6% compared with 3.4% rise of the industry it belongs to and 19.4% increase of the Zacks S&P 500 composite.

 

Quarterly Numbers in Detail

Revenues at the Research segment increased 7% year over year on a reported basis and 10% on a foreign currency-neutral basis to $826 million. Gross contribution margin was 69% in the reported quarter.

Revenues at the Conferences segment increased 27% year over year on a reported basis and 29% on a foreign currency-neutral basis to $141 million. Gross contribution margin was 57%.

Revenues at the Consulting segment grew 7% year over year on a reported basis and 10% on a foreign currency-neutral basis to $104 million. Gross contribution margin was 33% in the reported quarter.

Gartner, Inc. Price, Consensus and EPS Surprise

 

Gartner, Inc. Price, Consensus and EPS Surprise

Gartner, Inc. price-consensus-eps-surprise-chart | Gartner, Inc. Quote

Adjusted EBITDA of $185 million increased 1% year over year on a reported basis and 4% on a foreign currency-neutral basis.

Operating cash flow totaled $227 million and free cash flow was $197 million in the reported quarter. Capital expenditures came in at $39 million.

2019 View

Gartner updated its full-year 2019 guidance. The company now projects revenues in the range of $4.22-$4.26 billion compared with the previously guided range of $4.22-$4.32 billion. The current Zacks Consensus Estimate of $4.27 billion lies above the guided range.

Adjusted EPS is anticipated in the range of $3.39-$3.64 compared with the previously guided range of $3.82-$4.19. The current Zacks Consensus Estimate of $3.96 lies above the guided range.

Adjusted EBITDA is projected in the range of $670-$700 million compared with the previously guided range of $720-$765 million. Operating cash flow is anticipated in the range of $487-$527 million compared with the prior guidance of $542 million to $582 million while free cash flow is expected in the range of $400- 430 million compared with the previously guided range of $455-$485 million.

Zacks Rank & Upcoming Releases

Currently, Gartner carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting second-quarter 2019 earnings of key players like Genpact G, Green Dot GDOT and Navigant Consulting NCI. While Genpact and Green Dot are slated to report on Aug 7, Navigant Consulting is scheduled to release results on Aug 8.

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