A month has gone by since the last earnings report for Gartner (IT). Shares have added about 3.2% 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, Inc. reported better-than-expected second-quarter 2023 results.
Adjusted earnings (excluding 37 cents from non-recurring items) per share of $2.85 beat the Zacks Consensus Estimate by 14.9% but matched the year-ago reported figure. Revenues of $1.5 billion beat the consensus estimate by 1% and improved 9.2% year over year on a reported basis and 10% on a foreign-currency-neutral basis.
Total contract value was $4.6 billion, up 8.9% year over year on a foreign-currency-neutral basis.
Quarterly Numbers in Detail
Revenues in the Research segment increased 5.7% year over year on a reported basis and 6.5% on a foreign-currency-neutral basis to $1.21 billion. Gross contribution margin was 73.3%, which came to $885 million in the reported quarter.
Conferences’ revenues surged 48.8% year over year on a reported basis and 48.4% on foreign-currency-neutral basis to $169 million. Gross contribution margin was 58.3% in the reported quarter.
Revenues in the Consulting segment grew 4.8% year over year on a reported basis and 5.9% on a foreign-currency-neutral basis to $126 million. Gross contribution margin was 37.4% in the reported quarter.
Adjusted EBITDA of $384 million declined 1.2% year over year on a reported basis and 0.3% on a foreign-currency-neutral basis.
Operating cash flow totaled $436 million while free cash flow was $410 million in the reported quarter. Capital expenditures totaled $26 million.
Updated 2023 Outlook
Total revenues are expected to be $5.85 billion, up from the previous guidance of $5.90 billion. Adjusted earnings per share is now anticipated to be $10.00, up from the previous guidance of $9.50.
Adjusted EBITDA is projected to be $1.36 billion, raised from the earlier guidance of $1.33 billion. Free cash flow is anticipated to be $975 million, up from the prior expectation of $920 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 -5.94% due to these changes.
Currently, Gartner has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Gartner has a Zacks Rank #3 (Hold). We expect an in-line 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 1.9%. The company reported its results for the quarter ended June 2023 more than a month ago.
FTI Consulting reported revenues of $864.59 million in the last reported quarter, representing a year-over-year change of +14.5%. EPS of $1.75 for the same period compares with $1.43 a year ago.
For the current quarter, FTI Consulting is expected to post earnings of $1.84 per share, indicating a change of -14.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -7.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #5 (Strong Sell) for FTI Consulting. Also, the stock has a VGM Score of C.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.