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Gartner's (IT) Vast Customer Base Aids Growth, Liquidity Woes Ail

Gartner, Inc. IT, driven by its large customer base courtesy of its high-quality research reports, has reported better-than-expected earnings in all four trailing quarters.

Gartner’s first-quarter 2023 earnings (excluding 49 cents from non-recurring items) per share of $2.88 beat the Zacks Consensus Estimate by 41.2% and increased 23.6% year over year. Revenues of $1.41 billion beat the consensus estimate by 1.3% and improved 11.6% year over year on a reported basis and 14.3% on a foreign-currency-neutral basis.

Driven by the above-mentioned tailwinds, Gartner has outperformed its industry in the past year, growing 28.5% compared with its industry’s 3.5% increase.

Gartner, Inc. Price

 

Gartner, Inc. Price
Gartner, Inc. Price

Gartner, Inc. price | Gartner, Inc. Quote

 

Current Situation of Gartner

Gartner serves a large addressable market, where the quality reports provided by the company are considered to be comprehensive, objective and independent. Further, these reports provide actionable insights to users. All these factors make Gartner indispensable to companies operating in different sectors, allowing them to earn a competitive advantage. The company also benefits from lower customer concentration which enables operating risks to be as low as possible.

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The acquisition of CEB further reinforces Gartner’s market strength. The combination of the latter’s analyst-driven, syndicated research and advisory services with the former’s best practice and talent management insights across a range of business functions is likely to provide a comprehensive and differentiated suite of services portfolio across the globe.

Gartner’s efforts to reward its shareholders are praiseworthy. In 2022, 2021 and 2020, Gartner repurchased 3.8 million, 7.3 million and 1.2 million shares for $1 billion, $1.7 billion, and $176.3 million, respectively. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in business.

Some Concerning Points

Gartner’s global presence exposes it to the risk of foreign currency fluctuations. Appreciation or depreciation of the U.S. dollar versus foreign currencies impacts the company’s results.

Gartner's current ratio at the end of first-quarter 2023 was pegged at 0.84, lower than the current ratio of 0.70 reported at the end of the prior-year quarter. It indicates that the company may have problems meeting its short-term debt obligations.

Zacks Rank and Stocks to Consider

IT currently carries a Zacks Rank #3 (Hold).

Investors interested in the Zacks Business Services sector can consider the following stocks:

Green Dot GDOT: For second-quarter 2023, the Zacks Consensus Estimate of Green Dot’s revenues suggests a decline of 4.5% year over year to $339.2 million and the same for earnings indicates a 52.7% plunge to 35 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 37.3%.

GDOT has a VGM score of A and currently sports a Zacks Rank #1(Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Maximus MMS: For second-quarter 2023, the Zacks Consensus Estimate of Maximus’ revenues suggests an increase of 6.1% year over year to $1.2 billion and the same for earnings indicates a 35.9% rise to $1.06 per share. The company has an impressive earning surprise history, beating the consensus mark in three instances and missing on one instance, the average surprise being 9.6%.

MMS has a VGM score of A along with a Zacks Rank #2 (Buy).

Booz Allen BAH: For fourth-quarter fiscal 2023, the Zacks Consensus Estimate of Booz Allen’s revenues suggests an increase of 5.9% year over year to $2.4 billion and the same for earnings indicates a 5.8% rise to 91 cents per share. The company has an impressive earning surprise history, beating the consensus mark in all four trailing quarters, the average surprise being 8.7%.

BAH carries a Zacks Rank of 2.

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Gartner, Inc. (IT) : Free Stock Analysis Report

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