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Gartner (NYSE:IT) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Gartner, Inc. (NYSE:IT) is scheduled to report Q3 earnings results before markets open for trading on November 3, 2020.

The company is expected to report earnings of $0.53/share on revenue of $930.5 million. The consensus earnings per share (EPS) of $0.53/share is based on a poll of 9 analysts and represents a decline in eps of −24.9% over the same quarter last year, when the company reported earnings of $0.70/share.

The revenue forecast of $930.5 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −7.0%. Last year the company reported $1.001 billion in revenue for the quarter.

Expected to report EPS contraction of −24.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $930.46 $1,000.50 −7.0%
EPS $0.53 $0.70 −24.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from Gartner, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.81 $1.20 48.8% Beat
Q1, 2020 $0.32 $1.20 269.9% Beat
Q4, 2019 $0.82 $1.18 44.6% Beat
Q3, 2019 $0.43 $0.70 62.8% Beat
Q2, 2019 $1.18 $1.45 22.9% Beat
Q1, 2019 $0.53 $0.58 9.7% Beat
Q4, 2018 $1.25 $1.20 −3.8% Missed
Q3, 2018 $0.62 $0.85 37.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 3.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $125.66 $129.39 3.0% Increase
May 7, 2020
$115.02
$122.58 6.57% Increase
Feb 4, 2020
$163.85 $154.31 -5.82% Decrease
Oct 31, 2019
$146.67 $156.09 6.42% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.85, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.85 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Gartner, Inc. is currently trading at $117.42/share, down −3.7% for the day. The company is trading at approximately 71.4% of its 52-week high of $165.26/share. The company’s stock price is down −9.2% since the last earnings report and down −8.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 37.65 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:IT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 43.70 and a forward P/E multiple of 39.09.

Gartner, Inc.’s current share price also implies a price-to-book (P/B) multiple of 10.55. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $117.42
P/E Ratio 43.7x
P/E Ratio (Fwd) 39.1x
PEG Ratio 4.4
Total Debt / Total Capital 21.5%
Levered Free Cash Flow $565.9 million
EV / EBITDA 20.6x

Finbox

Gartner, Inc. is a large-cap stock with a market capitalization of $10.881 billion and a total enterprise value of $13.511 billion. The company operates in the Information Technology sector and the IT Services industry.

Gartner, Inc. operates as a research and advisory company. It operates through three segments: Research, Conferences, and Consulting. The Research segment offers objective insights and advice on the priorities of various leaders in a range of functional areas of the enterprise through reports, briefings, proprietary tools, access to research expert, peer networking services, and membership programs that enable clients to drive organizational performance; and research and analysis in various business functions, such as human resources, sales, legal, and finance. This segment delivers its research, primarily through a subscription service. The Conferences segment offers business professionals in an organization the opportunity to learn, share, and network various events. The Consulting segment offers market research, custom analysis, and on-the-ground support services. This segment also offers actionable solutions for IT-related priorities, including IT cost optimization, technology modernization, and IT sourcing optimization. The company has operations in the United States, Canada, Europe, the Middle East, Africa, and internationally. Gartner, Inc. was founded in 1979 and is headquartered in Stamford, Connecticut.

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