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Gartner Inc

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Gartner Inc AI Insights

Informational only. Not investment advice.
As of 2026-01-16

Snapshot

  • Goodwill of 2.8B is 501% of equity (556M) - tangible book value is -2.6B, creating material impairment risk from any acquisition writedown.[Goodwill]
  • ROE TTM of 109% driven by 5.0x debt/equity leverage - equity base of just 557M supports 6.5B revenue, amplifying returns but also risk.[Return on Equity TTM]
  • FCF TTM of 1.2B (19% margin) funds 1.1B buybacks annually - shares declining while debt/equity at 5x limits further leverage capacity.[Free Cash Flow TTM]

Watch Triggers

  • Goodwill: Impairment charge >5% of goodwill (>140M)Would eliminate ~25% of annual net income and signal overpayment for acquisitions
  • Free Cash Flow TTM: FCF margin falls below 15%Would force choice between buybacks and debt reduction given 5x leverage
  • Debt to Equity: Rises above 6.0xApproaching levels that could trigger covenant concerns or rating downgrades

Bull Case

Operating margin 18% TTM vs industry median of 0% - pricing power in research/advisory creates durable competitive moat with 68% gross margins.

Operating Margin TTMGross Margin TTM

ROIC of 24% TTM vs industry median -22% demonstrates exceptional capital efficiency; generates 1.2B FCF on just 3B invested capital.

Return on Invested Capital TTMFree Cash Flow TTM

Bear Case

Negative tangible equity (-2.6B) with goodwill at 501% of book value - any impairment directly hits already thin equity cushion of 557M.

GoodwillTangible Book ValueTotal Equity

168M asset impairment charge TTM signals acquisition integration challenges; 150M special charges add to earnings quality concerns.

Asset Impairment ChargeSpecial Income Charges

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
55%

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Forward Thesis

Capital return machine will sustain 10%+ annual share count reduction through FCF-funded buybacks

1-3yhigh
  • 1.2B FCF vs 1.1B buybacks TTM is sustainable
  • Low capex (1.8% of revenue) preserves cash
  • Subscription model provides visibility
FCF margin 19% TTM vs industry median negativeCapex -115M TTM (1.8% of revenue)Net stock issuance -1.1B TTM

Leverage ratio constrains future M&A optionality despite strong cash generation

1-3ymed
  • Debt/equity already at 5.0x
  • 2.8B debt vs 557M equity
  • Interest expense 115M (10% of operating income)
Total Debt 2.8B TTMInterest Expense 115M TTMWorking capital -427M

Valuation Context

Caveats

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