It has been about a month since the last earnings report for Gartner (IT). Shares have lost about 6.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Gartner due for a breakout? 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 & Revenue Estimates
Gartnerreported better-than-expected first-quarter 2022 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of $2.33 beat the consensus mark by 23.3% and increased 16.5% year over year. Revenues of $1.26 billion beat the consensus estimate by 1.7% and improved 14.4% year over year on a reported basis and 16.4% on a foreign-currency-neutral basis.
Total contract value was $4.2 billion, up 16.3% year over year on a foreign-currency-neutral basis.
Quarterly Numbers in Detail
Revenues at the Research segment increased 16% year over year on a reported and 17.9% on a foreign-currency-neutral basis to $1.14 billion. Gross contribution margin was 74.7% in the reported quarter.
Revenues at the Conferences segment fell 58.3% year over year on a reported basis and 57.3% on a foreign-currency-neutral basis to $10 million. Gross contribution margin dropped to 27.8% in the reported quarter.
Revenues at the Consulting segment grew 16.6% year over year on a reported basis and 19.9% on a foreign-currency-neutral basis to $116 million. Gross contribution margin was 44% in the reported quarter.
Adjusted EBITDA of $329 million improved 2.6% year over year on a reported basis and 4.7% on a foreign-currency-neutral basis.
Operating cash flow totaled $168 million while free cash flow was $150 million in the reported quarter. Capital expenditures totaled $17 million. Gartner repurchased 1.6 million common shares for $451 million.
2022 View
Gartner raised its full-year 2022 guidance. IT expects total revenues to be $5.275 billion (previous view: $5.18 billion). Adjusted EPS is anticipated to be $7.80 (previous view: $6.74). Adjusted EBITDA is projected to be $1.14 billion (previous view: $1.04 billion). Free cash flow is anticipated to be 930 million (previous view: $850 million).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 20.11% due to these changes.
VGM Scores
Currently, Gartner has an average Growth Score of C, however its Momentum Score is doing a bit better 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 D. 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.
Performance of an Industry Player
Gartner is part of the Zacks Consulting Services industry. Over the past month, FTI Consulting (FCN), a stock from the same industry, has gained 2.5%. The company reported its results for the quarter ended March 2022 more than a month ago.
FTI Consulting reported revenues of $723.62 million in the last reported quarter, representing a year-over-year change of +5.4%. EPS of $1.66 for the same period compares with $1.89 a year ago.
FTI Consulting is expected to post earnings of $1.67 per share for the current quarter, representing a year-over-year change of -4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for FTI Consulting. Also, the stock has a VGM Score of D.
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