Please ensure Javascript is enabled for purposes of website accessibility

Why Gartner's Shares Popped 20.9% Today

By Travis Hoium - May 4, 2021 at 2:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The earnings beat was big, but guidance should get investors' attention.

What happened 

Shares of Gartner (IT 0.70%) jumped as much as 20.9% in trading on Tuesday after the company reported first-quarter 2021 financial results. Shares gave up some of those gains throughout the day but were up 13% at 1:40 p.m. EDT. 

So what

Revenue rose 8.4% versus a year ago to $1.1 billion and was slightly ahead of expectations. Net income more than doubled from $75 million to $164.1 million, or $1.84 per share. On an adjusted basis, earnings were $2 per share, beating estimates of $1.05 per share by a wide margin.

Hand adding coins to the first of growing stacks of coins with small plants on top

Image source: Getty Images.

The total contract value was up 5.8% on a currency-neutral basis to $3.7 billion, indicating that more growth is ahead. And management increased total revenue guidance from $4.4 billion to $4.5 billion and free cash flow guidance from $630 million to $850 million. 

Now what

Gartner's business seems to be hitting on all cylinders with research, consulting, and conferences expected to grow this year. And the top-line growth is translating to better cash margins, which can be seen by improved free cash flow expectations in 2020. As the economy gets back to more normal operations, Gartner is likely to be a beneficiary, which we're seeing the market realize today. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Gartner, Inc. Stock Quote
Gartner, Inc.
$241.83 (0.70%) $1.69

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.