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Gartner (IT) Stock Rallies 33.5% in 6 Months: Here's Why

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Zacks Equity Research
·3 min read
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Shares of Gartner Inc. IT have gained 33.5% over the past six months, ahead of 27.3% growth of the industry it belongs to and 22.2% surge of the Zacks S&P 500 composite.

 

Let’s delve into factors which have contributed to the company’s price performance.

Upbeat 2020 Guidance

Gartner raised its full-year 2020 guidance. The company now expects total revenues to be $4.05 billion compared with the prior guidance of $3.88 billion. The current Zacks Consensus Estimate of $4.07 lies above the updated guidance.

Adjusted EPS is anticipated to be $4.07 compared with the prior guidance of $3.08. The current Zacks Consensus Estimate of $4.13 is higher than the updated guidance.

Adjusted EBITDA is projected to be $740 million compared with the prior guidance of $635 million. Free cash flow is anticipated to be $625 million compared with the prior guidance of $425 million.

Consecutive Earnings Beat

Gartner came up with better-than-expected earnings performance in all four quarters of 2019 as well as in the first three quarters of 2020. The company’s bottom line continued to benefit from improvement in operational efficiency.

Diverse Addressable Market

Gartner has a large and diverse addressable market with low customer concentration that mitigates operating risks. Operating in an industry with low barriers to entry, Gartner has an integrated research and consulting team designed to best serve client needs. This enables it to have a competitive advantage against its rivals. Leveraging the breadth and depth of its intellectual capital, Gartner creates and distributes proprietary research content as broadly as possible via published reports, interactive tools, facilitated peer networking, briefings, consulting and advisory services, and events. These facilitate a steadily improving revenue stream for the company.

Zacks Rank and Stocks to Consider

Gartner currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Business Services sector are Heidrick & Struggles International HSII, Automatic Data Processing ADP and Insperity NSP, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for Heidrick & Struggles International, Automatic Data Processing and Insperity is 10%, 12% and 15%, respectively.

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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
 
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