Why Gartner Stock Skyrocketed This Week
Key Points
Gartner recorded a big earnings beat in the second quarter, and sales also beat expectations.
The company raised its full-year earnings target, and it's continuing its big buyback push.
- 10 stocks we like better than Gartner ›
Gartner (NYSE: IT) stock surged this week after the information services specialist reported better-than-expected quarterly results. The company's share price climbed 22.9% in the week amid the backdrop of a 3.6% gain for the S&P 500 and a 5.2% gain for the Nasdaq Composite.
Gartner's valuation has been under pressure over the last year due to concerns that artificial intelligence (AI) will disrupt its business, but the company's second-quarter results were better than anticipated. The company also raised its full-year guidance and continued to expand its share buyback program.
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Gartner delivered a big earnings beat in Q2
In the second quarter, Gartner posted non-GAAP (adjusted) earnings per share of $4.37 on revenue of approximately $1.7 billion. The company's adjusted profit per share was $0.64 better than the average Wall Street analyst estimate, and sales came in $50 million ahead of the average target. While revenue was only up 0.6% year over year, free cash flow and net income were up 8.9% and 14.4%, respectively.
What's next for Gartner?
Gartner provided updated full-year guidance with its Q2 report, and the update was largely positive. While the company lowered its full-year adjusted revenue guidance from $5.2 billion to $5.17 billion, this was due to adverse foreign exchange impacts. The big upside was that the information services leader delivered significant increases in its earnings and free cash flow targets.
Gartner now expects adjusted earnings of $14 per share for the year -- up from its previous target for per-share earnings of $13.25. Meanwhile, free cash flow for the year is now projected to be $1.185 billion -- up from $1.16 billion. Gartner's board of directors has also increased the company's share repurchase authorization by another $500 million. With the company delivering improved operating efficiency and ramping up buybacks, the business could continue to see relatively strong earnings growth.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.
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