Gartner Inc. Earnings Cheat Sheet: Five Quarters in a Row of Expanding Margins, Net Income Climbs

Gartner Inc. (NYSE:IT) reported net income above Wall Street’s expectations for the third quarter. Gartner is an information technology research and advisory company, which offers independent and objective research and analysis on the information technology, computer hardware, software, communications and related technology industries.

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Gartner Earnings Cheat Sheet for the Third Quarter

Results: Net income for the management services company rose to $30.5 million (31 cents per share) vs. $20.1 million (20 cents per share) in the same quarter a year earlier. This marks a rise of 51.8% from the year earlier quarter.

Revenue: Rose 16.8% to $345.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: IT beat the mean analyst estimate of 29 cents per share. It beat the average revenue estimate of $338.7 million.

Quoting Management: Gene Hall, Gartner’s chief executive officer, commented, “Our third quarter results continued our trend of delivering consistent double-digit growth. Revenue, contract value, Normalized EBITDA and EPS again grew at double-digit rates, consistent with our long-term expectations. The increases in our revenue and contract value, as well as the expansion of key operating metrics such as wallet retention, illustrate both the value we provide to our clients and the market opportunity for our services.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 14.3%, with the biggest boost coming in the most recent quarter when revenue rose 16.8% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 1.2 percentage points to 58.7% from the year earlier quarter. Over that span, margins have grown on average 1.6 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 60.2% and in the first quarter, the figure rose 50.4%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 3 cents in the second quarter, by one cent in the first quarter, and by one cent in the fourth quarter of the last fiscal year.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the fourth quarter is 48 cents per share, a drop from 49 cents. Over the past sixty days, the average estimate for the fiscal year has reached $1.40 abs per share, a decline from $1.42.

Competitors to Watch: Forrester Research, Inc. (NASDAQ:FORR), Microsoft Corporation (NASDAQ:MSFT), Google Inc. (NASDAQ:GOOG), Intl. Business Machines Corp. (NYSE:IBM), Nielsen Hldg NV (NYSE:NLSN), Navigant Consulting, Inc. (NYSE:NCI), Information Services Group, Inc. (NASDAQ:III), Harris Interactive Inc. (NASDAQ:HPOL), and Apple Inc. (NASDAQ:AAPL).

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(Source: Xignite Financials)