Gartner, Inc. IT has had a decent run year to date. The company’s shares have gained 15.9% outperforming the 12.4% rally of its industry.
YTD Price Performance
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IT 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 beat the consensus estimate marginally and improved 5.4% year over year.
How is Gartner Faring?
The company operates in a low-barrier-to-entry industry. Gartner has a differentiated product portfolio, and an integrated research and consulting team to best serve diverse customer needs. This enables IT to have a competitive advantage against its rivals.
Gartner offers a timely, thought-provoking and comprehensive analysis known for its pristine quality, independence and objectivity. These unbiased, practical and actionable insights can assist organizations to efficiently save thousands of dollars through in-depth research, offering a huge value proposition to clients.
With rapid technological strides and the massive proliferation of the Internet of Things, the differences between the physical and digital worlds have gradually diminished. Hence, information technology has become crucial for all organizations to support higher productivity, augment performance metrics and protect the enterprise from cyber-security risks.
To keep up-to-date with developments in the dynamic and complex industry, and make well-informed decisions to maximize returns on IT capital investments, business enterprises and government bodies solicit Gartner’s research and consultancy services. This enables the company to charge a premium for its services.
In 2023, 2022 and 2021, Gartner repurchased 3.9 million, 3.8 million and 7.3 million shares for $600 million, $1 billion and $1.7 billion, respectively. Such moves indicate the company’s commitment to create shareholder value and underline its business confidence. Also, these strategies boost investors’ confidence in the stock and impact the bottom line positively.
Gartner's current ratio (a measure of liquidity) at the end of the third quarter of 2024 was pegged at 1.02. Although lower than its industry’s 1.35, a current ratio of more than 1 often indicates that the company will pay off its short-term obligations efficiently.
Risk Faced by IT
Gartner faces fierce competition from other companies in the market, whose barriers to entry are limited. There are a significant number of independent providers of information products and services, such as electronic and print media companies, and consulting organizations. The surge in competition could result in a decline in market share, deterioration in the value of products and services, lowered pricing, and increased sales and marketing expenses.
The higher cost of talent because of a competitive talent market has a detrimental impact on consulting services companies like Gartner. The industry relies heavily on labor and might witness an increase in attrition as competition rises.
Zacks Rank & Stocks to Consider
Gartner carries a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks in the broader Zacks Business Services sector are Parsons PSN and Qifu Technology, Inc. QFIN.
Parsons flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PSN has a long-term earnings growth expectation of 18.6%. It delivered a trailing four-quarter earnings surprise of 17.5%, on average.
Qifu Technology sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 14.5%.
QFIN delivered a trailing four-quarter earnings surprise of 8.6%, on average.
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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.
