IT - Embedded Expectations Analysis - 2019 10 03
Gartner, Inc. (IT:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 26.8x Uniform P/E. At these levels, the market has expectations for stable profitability, but management has concerns about EBITDA, contract value, and headcount.Specifically, management may lack confidence in their ability to sustain growth among all of their business segments, and they may be concerned about the sustainability of recent backlog growth. Furthermore, they may lack confidence in their ability to sustain recent EBITDA growth, and they may be concerned about the impact of product retirements on EBITDA growth. Moreover, they may lack confidence in their ability to achieve double-digit contract value growth in 2019, and they may be concerned about the sustainability of recent GBS contract value. Finally, they may be concerned about the sustainability of recent employee growth in their GTS unit, and they may lack confidence in their ability to improve their sales productivity while growing headcount.
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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