In This Article:
Gartner, Inc. IT stock has showcased a decent run in the past six months. Shares of the company have gained 9.5%, outperforming the industry by a slight margin and the Zacks S&P 500 composite by 7.4%, respectively.
Six Months Price Performance
Image Source: Zacks Investment Research
Gartner reported better-than-expected third-quarter 2024 results. The company’s adjusted earnings per share of $2.5 beat the Zacks Consensus Estimate by 2% but decreased 2.3% from the year-ago quarter. Revenues of $1.5 billion surpassed the consensus estimate marginally and improved 5.4% year over year.
Factors That Auger Well for Gartner’s Success
IT offers a diverse range of products and services with low customer concentration that mitigates operating risks. The company operates in an industry with low barriers to entry. Gartner has a differentiated product portfolio, and an integrated research and consulting team designed to meet different client needs. This serves as a competitive edge against its rivals.
The company offers a timely, thought-provoking and comprehensive analysis known for its supreme quality, independence and objectivity. These unbiased, practical and actionable insights can benefit organizations to save tons of money efficiently via in-depth research, offering a huge value proposition to their customers.
With rapid technological advancements and the massive proliferation of the Internet of Things, the line between the physical and digital worlds has diminished. This is why information technology has become important for companies to drive higher productivity, enhance performance metrics and tackle cyber-security threats. To keep up with the new developments in the dynamic and complex industry and make well-informed decisions to maximize returns on IT capital investments, business enterprises and government agencies seek Gartner’s research and consultancy services. This enables the company to charge a premium for its services.
In 2021, 2022 and 2023, IT repurchased 7.3 million, 3.8 million and 3.9 million shares for $1.7 billion, $1 billion and $600 million, respectively. Such strategies indicate the company’s commitment to create value for shareholders and underline its business confidence.
Gartner's current ratio (a measure of liquidity) at the end of the third quarter of 2024 was pegged at 1.02. Despite being lower than its industry’s 1.25, a current ratio of more than 1 often indicates that the company will easily pay off its short-term obligations.
Risks Faced by Gartner
The company deals with stiff competition from other players in the market. There are multiple consulting companies and independent providers of information products and services, such as electronic and print media companies. The surge in competition could result in loss of market share, deterioration in the value of products and services, lower pricing, and increased sales and marketing costs.