Please ensure Javascript is enabled for purposes of website accessibility

Why Gartner Is Popping Today

By Eric Volkman – Aug 3, 2021 at 4:07PM

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

You'd be a hot item too if you crushed analyst bottom-line estimates this convincingly.

What happened

Now this is an earnings beat.

Tuesday morning, top IT business analysis company Gartner (IT -0.20%) reported its second-quarter results, which obliterated analyst estimates for profitability. Consequently, the company's stock shot higher and stayed there; in late afternoon trading it was up by over 10%.

So what

For the period, Gartner earned $1.2 billion. That was a 20% improvement over the same quarter last year. Net income saw a much sharper rise, advancing 85% to $271 million. On a non-GAAP (adjusted) basis the company earned $2.24 per share.

On average, prognosticators following the stock were expecting only $1.12 billion on the top line and adjusted per-share net income of $1.73.

U.S. currency shooting from a laptop screen.

Image source: Getty Images.

Revenue from Gartner's classic product line, its IT market research, grew by almost 15% in the quarter, helped greatly by an over-200% leap in proceeds for industry conferences. Consulting revenue rose more sluggishly, climbing by 9%.

On the back of those encouraging growth numbers, Gartner has raised its 2021 guidance. The company now believes it will book $4.57 billion on the top line (previous outlook: $4.51 billion) and net an adjusted, per-share profit of $7.60, up from the previous $6.25. Free cash flow should come in at $1.13 billion, substantially higher than the formerly expected $850 million.

Now what

As the tech sector continues to ever broaden and deepen, demand for the market intelligence Gartner specializes in should rise commensurately. The company's rosy 2021 projections, then, feel entirely realistic.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

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 Stock Quote
Gartner
IT
$342.57 (-0.20%) $0.70

*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
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

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.