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Summary Dashboard
| Metric | Value | Context |
|---|---|---|
| Current Price | ~$148.81 | Near 52-week low ($139.18 low / $413.26 high) |
| Peak Price | ~$584 (Jan 2025) | Down 75% from peak |
| Market Cap | ~$10B | Shrinking rapidly via buybacks |
| Forward P/E | 9.7x | Historically depressed (was 30-35x in 2022-2024) |
| Operating Margin | 20.5% | Stable; still high-quality |
| FCF Yield | 11.8% | Based on FY2025 $1.175B FCF |
| Dividend | None | All capital returned via buybacks |
| Contract Value Growth | +1% YoY (Q1 2026) | ⚠️ CRITICAL — was 7%+ in 2022 |
| Analyst Consensus | 3 Buy / 10 Hold / 2 Sell | Heavily neutral with sell overhang |
| Deferred Revenue | $2.84B | Still growing — subscription base intact |
Bottom line up front: Gartner was screened as a wide-moat research subscription business. The moat is real, but is under material pressure. Contract Value (the leading indicator for future revenue) grew only 1% YoY in Q1 2026, with a net quarterly decline of $56M — a business that had 7%+ CV growth two years ago. This is not a de-rating on a fine business. It's a fine business with a deteriorating subscription engine. The cheap P/E is partly justified.
Fundamentals Analyst
Revenue & Earnings (FY = calendar December 31)
| Metric | FY2022 | FY2023 | FY2024 | FY2025 | 3-yr CAGR |
|---|---|---|---|---|---|
| Total Revenue | $5.476B | $5.907B | $6.267B | $6.497B | +5.8% |
| Gross Profit | $3.782B | $4.004B | $4.244B | $4.444B | +5.5% |
| Gross Margin | 69.1% | 67.8% | 67.7% | 68.4% | Stable ~68% |
| Operating Income | $1.109B | $1.111B | $1.157B | $1.176B | +2.0% |
| Operating Margin | 20.3% | 18.8% | 18.5% | 18.1% | ⚠️ Slight compression |
| Net Income (reported) | $808M | $882M | $1,254M | $729M | — (special items distort) |
| Normalized Net Income | $815M | $783M | $983M | $842M | +1.1% |
| Diluted EPS (reported) | $9.96 | $11.08 | $16.00 | $9.65 | — |
| Normalized Diluted EPS | ~$10.05 | ~$9.83 | ~$12.56 | ~$11.14 | +3.5% |
| Free Cash Flow | $993M | $1,053M | $1,383M | $1,175M | +5.8% |
On the EPS swings: FY2024 net income was inflated by $299M in special items (investment gains, divestitures). FY2025 had a $150M impairment charge dragging it down. Normalized earnings are flat at ~$11/share. EPS growth comes almost entirely from share buybacks, not business growth.
On revenue growth: 5.8% 3-yr CAGR looks decent in isolation. But it's decelerating: FY2023: +7.9%, FY2024: +6.1%, FY2025: +3.7%, and Q1 2026 is tracking below 3% organically. The Contract Value (forward subscription bookings) grew only 1% YoY in Q1 2026 — meaning revenue growth will slow further in 2026-2027.
Key Leading Indicator: Contract Value Growth
| Period | CV Growth (YoY, FX-neutral) | Quarterly Change |
|---|---|---|
| FY2022 peak | ~7-8% | Positive |
| Q3 2025 | ~5% | Slowing |
| Q4 2025 | ~1% | Slowing |
| Q1 2026 | +1% YoY | -$56M net quarterly decline |
⚠️ A subscription business with negative net new contract additions is in contraction territory. Revenue will lag CV by 6-18 months. If CV stays at 1%, FY2027 revenue will be essentially flat or declining organically.
Per-Share & Capital Allocation
| Metric | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|
| FCF per share | $12.25 | $13.21 | $17.67 | $15.54 |
| SBC | $90.6M | $129.8M | $154.8M | $155.9M |
| SBC as % FCF | 9.1% | 12.3% | 11.2% | 13.3% |
| SBC-adjusted FCF | $902M | $923M | $1,228M | $1,019M |
| Diluted shares | 81.1M | 79.7M | 78.3M | 75.6M |
| Annual share reduction | — | -1.7% | -1.8% | -3.5% |
Capital Allocation (FY2025 — $1,175M FCF): | Use | Amount | Note | |---|---|---| | Buybacks | $1,991M | 169% of FCF — funded with debt | | Dividends | $0 | No dividend | | Capex | $115M | Very low; capital-light model | | Net debt increase | $732M | Borrowed to fund buybacks |
This is aggressive financial engineering. Gartner is borrowing money to repurchase shares at a 75%-down-from-peak price. If the business stabilizes or recovers, this will be extraordinarily value-creating. If the business continues to deteriorate, the leverage amplifies the damage.
Balance Sheet
| Metric | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|
| Cash | $698M | $1,319M | $1,933M | $1,723M |
| Total Debt | $3,158M | $3,070M | $2,900M | $3,348M |
| Net Debt | $1,763M | $1,139M | $527M | $1,259M |
| D/A | 43.3% | 39.2% | 34.0% | 41.4% |
| Tangible Book Value | -$3.29B | -$2.76B | -$1.98B | -$2.76B |
| Deferred Revenue (current) | $2.444B | $2.641B | $2.763B | $2.810B |
| Goodwill | $2.930B | $2.937B | $2.930B | $2.741B |
Critical context on negative tangible book: Gartner has bought back $9.04B of treasury stock historically. The company's book equity has been consumed by buybacks. This is normal for capital-return-focused businesses but means Graham's Number and asset-based valuation are meaningless here.
Deferred Revenue as moat indicator: $2.81B current deferred revenue (customers have already paid and Gartner owes them research). This is still growing slowly — showing the subscription base hasn't collapsed, just stopped expanding.
ROIC
| Metric | FY2024 | FY2025 |
|---|---|---|
| ROIC (incl. goodwill) | ~30% | ~27% |
| Tangible ROIC (ex-goodwill) | ~150%+ | ~158% |
Tangible ROIC is astronomical because the true capital base is very small after stripping goodwill from CEB acquisition. This confirms the underlying business economics are excellent — the moat generates extraordinary returns when things are working.
Moat Analyst
Moat Sources — What's Working
| Source | Strength | Status |
|---|---|---|
| Research subscription lock-in ($2.84B deferred) | ★★★★★ | Intact but not growing |
| Magic Quadrant vendor evaluation authority | ★★★★★ | Intact — still the standard |
| CIO/CFO peer benchmarking network | ★★★★ | Moderately at risk from AI alternatives |
| Executive advisory programs | ★★★★ | Sticky; switching painful |
| Conference/events (Gartner IT Symposium) | ★★★ | Still draws top speakers/attendees |
Adversarial Stress Test: What Is Actually Disrupting Gartner
Primary threat: AI research tools The fundamental question CIOs and IT buyers used Gartner to answer: "What technology should I buy?" can now be partially answered by AI. ChatGPT, Perplexity, Microsoft Copilot, and Claude can now synthesize market intelligence, compare vendors, and provide research summaries. This is not a future threat — it's a present one.
The threat is most acute at the margin: new subscription buyers who don't yet have a Gartner relationship are less likely to initiate one. The renewal base (existing customers) remains sticky because switching from Gartner requires organizational change, not just budget reallocation.
Secondary threat: Government spending cuts Federal government is a meaningful Gartner subscriber (agencies need IT vendor guidance). DOGE-era spending cuts reduced Gartner's government business materially.
Response — AskGartner: Gartner launched AskGartner, an AI tool that summarizes research for subscribers. Early data shows AskGartner users have substantially higher renewal rates — suggesting the right response is to make the subscription MORE useful with AI, not fight AI. This is a smart strategic move, but it's early-stage.
Evergreen Rating: 5.5/10 (was 8/10 in 2022)
The moat exists but the 1% CV growth is concerning. Historically, Gartner's CV grew 7-10% annually. A business with 1% CV growth is a business where the moat is providing switching costs sufficient to retain clients but insufficient to win new ones. That's a narrowing moat, not a broken one, but not the wide moat that justified 30-35x P/E.
Key Question for Recovery
Can CV growth re-accelerate to 5%+ within 18 months? If yes, the stock is materially undervalued. If CV stays below 3%, the current P/E is actually not cheap — it's a decelerating subscription business with debt and buybacks masking the underlying erosion.
Management 3-year target: 12%+ adj. EPS CAGR. This is achievable via buybacks even with flat CV, but it's financial engineering, not business quality compounding.
Sentiment & Intelligence Analyst
Q1 2026 Results (May 5, 2026)
| Metric | Value | Context |
|---|---|---|
| Revenue | ~$1.65B | Tracking ~+5% YoY |
| Adj. EPS | Up 11% YoY | Share buybacks driving the growth |
| FCF guidance (FY2026) | Raised | Strong cash generation |
| CV Growth | +1% YoY | ⚠️ Key concern |
| Net quarterly CV change | -$56M | Negative — new cancellations > new bookings |
Management commentary: Expect CV to accelerate in 2026. 3-year adj. EPS target >12% CAGR. Positioned to benefit as AI complexity increases demand for research advisory.
The bull case management is making: AI creates more complexity → more need for Gartner's research and advisory to navigate vendor selection, make-vs-buy, data governance, AI ethics. AskGartner is AI-enhancing the product. Historical CV growth recoveries have happened before (COVID, 2012 recession).
The bear case the market is pricing: AI tools directly replace the entry-level research use case. Government spending cuts are structural, not cyclical. The 1% CV is the "new normal" in a world where AI provides good-enough answers.
Analyst Consensus
| Period | Strong Buy | Buy | Hold | Sell | Strong Sell |
|---|---|---|---|---|---|
| Current | 0 | 3 | 10 | 1 | 1 |
| -3 months | 0 | 2 | 9 | 1 | 2 |
Predominantly Hold/Neutral with 2 Sell-rated analysts. For a stock down 75%, this is NOT a typical "everyone hated it at the bottom" setup — the lack of conviction buys suggests institutional uncertainty about the CV trajectory.
Positive recent development: Stock up 7% over last 30 days (per TIKR report) suggesting some bottom-fishing institutional buying. Stifel recently upgraded defense spending outlook favorably (broader sector rotation), though not Gartner-specific.
Lawsuit Risk
Shareholders have filed a class-action alleging management concealed AI disruption risks and government spending cut risks that undermined growth projections. This adds a contingent liability risk but is common in large-cap declines and unlikely to materially impair the business.
Valuation Analyst
Fair Value Models
Note on model applicability: No dividends, negative tangible book → Graham's Number and DDM are not applicable. Primary models: FCF yield, Bogle, and P/E normalization.
1. FCF Yield Analysis - FY2025 FCF: $1,175M; SBC-adjusted: $1,019M - At $10B market cap: 11.8% gross FCF yield / 10.2% SBC-adj - FY2026 FCF guidance raised (above $1.3B per management commentary) - If FCF = $1.3B and you require 8% FCF yield: fair value = $1.3B / 0.08 = $16.25B = ~$230/share (70.8M shares) - If FCF = $1.3B and you require 10% FCF yield: fair value = $183/share - If FCF declines to $1.0B (CV contraction scenario) and 10% required: $141/share (near current)
FCF yield-based range: $141-$230 depending on CV trajectory
2. Bogle Expected Return - Dividend: 0% - EPS growth: 12% mgmt target (buyback-driven), 3-4% organic - P/E change: 9.7x fwd → recovery to 18x over 3 years = +23%/yr P/E tailwind - If business recovers: Total return ~15-20%/yr; fair value in 3 years: $15.33 EPS × 20x = $307 - If business stagnates: 3% EPS growth + 3% buyback = 6%/yr; fair value $148 = fairly valued
3. Normalized P/E - Normalized EPS: ~$11.14 (FY2025) - At 18x fair P/E: $200 (represents "recovery thesis" value) - At 12x (distressed subscription): $134 (bear case) - At 15x (consensus no-recovery): $167
Weighted Fair Value
| Scenario | Weight | Implied Value |
|---|---|---|
| Recovery (CV returns to 4-5%, FCF grows) | 35% | $200-230 |
| Stagnation (CV stays ~1-2%, buybacks support EPS) | 40% | $140-167 |
| Deterioration (CV goes negative, debt burden) | 25% | $80-120 |
| Weighted Fair Value | ~$163 |
Current price $148.81 = approximately 9% below weighted fair value. This is not a large margin of safety.
The catch: The stock only looks cheap if you give full credit to FCF and assume buybacks continue. The weighted scenario analysis shows the current price is close to the stagnation scenario value — meaning you need the recovery thesis to come true to make good money from here.
Debate Round: Bull vs. Bear
Bull case (Moat survives, CV recovers): 1. Q1 2026 deferred revenue still growing (+$66M YoY) — cancellations are moderating 2. AskGartner users show substantially higher renewal rates — AI is helping, not hurting, retention 3. Management raised FCF guidance for FY2026 — cash generation is real 4. 12% adj. EPS CAGR target is achievable via aggressive buybacks even with flat CV 5. Historical precedent: Gartner's CV has recovered from slowdowns before (2009, 2020) 6. At 9.7x P/E, even modest recovery creates significant upside
Bear case (Moat is structurally degrading): 1. 1% CV growth with -$56M quarterly addition is a business that is contracting at the margin 2. AI disruption of research advisory is structural, not cyclical — each subscription renewal cycle will see more AI-alternative competition 3. Government spending cuts are adding to a weakening growth picture 4. Buybacks are masking EPS decline; without buybacks, EPS is effectively flat 5. Management's 12% EPS target is achievable without any revenue growth — it's financial engineering, not value creation 6. Leveraged balance sheet ($3.35B debt) + declining core metric = dangerous combination if FCF deteriorates
Manager's resolution: Bear case wins on facts (CV is declining), bull case wins on valuation buffer (10%+ FCF yield and aggressive buybacks). This is a turnaround speculation, not a quality compounder. The market has appropriately repriced this from 30x P/E to 10x P/E. The question is whether it goes to 8x (further deterioration) or 18x (recovery). The answer is binary and CV-dependent.
Manager's Verdict
Conviction: 6.0/10 — WATCH, not add
The screen recommendation to "urgently analyze" was premature — the underlying reason for the 75% decline is real (CV collapse), not just sentiment. However, at 10%+ FCF yield and 9.7x fwd P/E with a recovering deferred revenue base, this is not a zero. It's a calculated bet on CV recovery.
Why not add yet: - CV growth needs to show positive quarterly additions for 2 consecutive quarters before the recovery thesis is confirmed - Analyst consensus is not bullish (2 sells, no strong buys) - FCF is supported by aggressive debt-funded buybacks, which adds leverage risk - Entry at $130-145 would provide more margin of safety vs. current $148
Watch signals for upgrading to [7.5+] and Buy Zone: 1. Q2 2026 results (Aug 2026): Net quarterly CV addition turns positive 2. CV growth re-accelerates to 3%+ 3. Government budget cycle normalizes, reducing federal headwind 4. AskGartner renewal rate data published (higher renewal = moat confirmed)
Watch signals for cutting to [5.0] and removing from list: 1. CV growth stays below 1% for 3 consecutive quarters 2. Net quarterly CV additions remain negative 3. FCF guidance reduction 4. Class action lawsuit materializes into meaningful damages
Action Items
| Action | Condition | Level |
|---|---|---|
| Monitor — watch CV metrics | CV+1% is not good enough | Now |
| Consider adding 1-2% position | IF Q2 2026 shows positive net quarterly CV | After Aug 2026 earnings |
| Entry zone | $130-145 | Near 52-week low |
| Full buy zone | $110-130 (requires more fundamental damage to reach, but better margin of safety) | If deteriorates further |
| Exit watch | CV < 0% for 2 qtrs | Structural break |
| Fair value target | $180-200 on recovery | 20-35% upside from $148 |
Watchlist status: Moving from shortlist "URGENT /analyze" to Watch section. Entry zone $130-145. CV trajectory is the thesis gate, not the stock price.
Key Risks
| Risk | Probability | Impact |
|---|---|---|
| CV continues declining in 2026 | High | High — would push fair value below current price |
| AI permanently disintermediates research advisory | Medium | Very High — thesis-killer |
| Debt-funded buybacks at trough become value trap | Medium | High — if business doesn't recover, debt amplifies loss |
| Class action lawsuit material settlement | Low | Low-Medium |
| Government spending recovery boosts CV | Medium | High positive |
Sources: Yahoo Finance MCP, Gartner Stock 48% Drop AI Disruption, TIKR: Gartner 52-Week Low After Guidance Miss, Yahoo Finance: Why Gartner Stock Was Cut In Half, Investing.com: Gartner Q1 2026, Gartner Q1 2026 Earnings Call — Motley Fool