IT - Embedded Expectations Analysis - 2019 06 03
Gartner, Inc. (IT:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 27.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their Conferences and Consulting segment revenue growth, investments into their sales teams, and their customer retention programs.Specifically, management may lack confidence in their ability to sustain growth in Conferences and Consulting segment revenue, labor-based revenues, and GTS contract values. Moreover, they may be concerned about their GBS capacity expansion, the impact of FX on their backlog, and their investments into their Global Business Sales team. In addition, they may be exaggerating the capabilities of their sales team and the increased engagement in their retention programs. Finally, management may be concerned about their ability to continue strong performance, sustain GTS productivity and headcount increases, and improve customer attrition.
Gartner is a research and advisory company. The company's principal products and services are delivered through its three business segments: Research, which provides insights and advice across various functional areas of the enterprise through research, briefings, proprietary tools, access to the company's research personnel, peer networking services and membership programs; Conferences, which provides business personnel across an organization the opportunity to learn, share and network; and Consulting, which helps chief information officers and other senior executives driving technology-related strategic initiatives move from insight to action.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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