ITNYSEThe short version
Gartner, Inc.
Gartner sells research and advisory subscriptions to over 13,000 enterprises across Research, Conferences, and Consulting. Its shares are down about 75% from a 2024 peak, and the framework tests whether that dislocation qualifies as an entry.
From a November 2024 peak of $552, the shares fell to $126 by June 2026 — a 74.6% drawdown — before edging back to $140.
Mkt cap $11.8BNet debt $1.3BEV $13.1BP/E FY27E 9.2×ND/EBITDA FY27E 0.8×
$140
Share price
$10.6B
Market cap
9.6%
Adjusted FCF yield
−74.6%
From 2024 peak
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Snapshot
Gartner, Inc. in numbers
Price
$140.19as of 2026-07-17
Mkt cap
$11.8B
Net debt
$1.3B
EV
$13.1B
12m perf
−61.2%
3m ADV
$233.1M
| Year to Dec (USD) | 2023 | 2024 | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|
| Sales | 5.9B | 6.3B | 6.5B | 6.4B | 6.7B | 7.1B |
| EBITDA | 1.4B | 1.4B | 1.2B | 1.6B | 1.6B | 1.7B |
| EBIT | 1.2B | 1.2B | 1.0B | 1.3B | 1.3B | 1.4B |
| EBIT margin | 20.9% | 18.4% | 15.8% | 19.9% | 19.9% | 20.4% |
| EPS | 11.08 | 16.00 | 9.65 | 13.68 | 15.31 | 17.48 |
| EV/EBITDA | 9.2× | 9.6× | 10.7× | 8.3× | 8.0× | 7.5× |
| EV/EBIT | 10.6× | 11.3× | 12.7× | 10.2× | 9.8× | 9.1× |
| P/E | 12.7× | 8.8× | 14.5× | 10.2× | 9.2× | 8.0× |
| FCF yield | – | – | – | 10.2% | 10.2% | 11.4% |
| Gearing | 167.4% | 38.8% | 393.6% | – | – | – |
Consensus: S&P Capital IQ (CapIQ) · as of 2026-07-29Derived from run data; ratios use the latest price.
IThe business
The business
A subscription research franchise clients prepay for
FY2025 revenue by segment ($B)
Research$5.3B82%
Conferences$0.6B10%
Consulting$0.6B8%
Research subscriptions are ~82% of FY2025's $6,497M revenue.
- Research is the engine. Syndicated subscriptions are ~82% of FY2025's $6,497M revenue at a 77% gross contribution margin; clients prepay, leaving $2,842M of contract liabilities on the balance sheet.
- Capital-light economics. Capex is only 1.8% of revenue and the model is customer-funded, so the business throws off cash without heavy reinvestment.
- Two smaller legs. Conferences ($645M) and Consulting ($552M) round out the mix; both feed the same executive-audience flywheel.
The profit pool
Steady cash, but operating margin fell from 21% to 16%
Operating margin (%)
- A steady cash base. Hand-built adjusted free cash flow held a tight band across FY2021–FY2025 — a ~$1,034M five-year average with no down years — off high-margin, prepaid subscriptions.
- The margin is fading. Operating margin fell from 20.9% in FY2023 to 15.8% in FY2025, and FY2025 free cash flow itself dropped 15% as personnel costs rose faster than revenue.
- A one-time dent. FY2025 also carried a $150M goodwill impairment in the Digital Markets unit and a 42% drop in reported net income to $729M.
IIIThe story now
The fit test
Does not fit the framework (P1 not met)
Not met
Year-10 durability gate (P1)p 0.60 · both model families
9.6%
Adjusted FCF yield vs 10% bar
0.38
Odds the impairment is temporary (P5)
High
Confidence in the verdict
- The gate decides it. Four jurors across two model families voted the year-10 durability gate not met (probability 0.60); under the framework that gate forces the outcome on its own, and nothing offsets it.
- Why the doubt. The forward engine stalled — total contract value grew ~1% and wallet retention fell below 100% in both salesforces — and the 10-K concedes 'limited barriers to entry' and names LLMs that could cut website visits.
- The counter. Gartner is still winning its peer race — FY2025 revenue +3.7% at 15.8% margin versus Forrester at −8.2% and a negative margin — and part of the retention hit is an isolable US-federal one-off.
The dislocation
Two guidance-day crashes inside a 75% collapse
Guidance-day closes: Aug 5, 2025 ($244) and Feb 3, 2026 ($160).
- Dated triggers. On Aug 5, 2025 Gartner cut full-year guidance on US-federal weakness and fell 27.6% in a session; on Feb 3, 2026 a weak 2026 guide sent it down 20.9% on the heaviest volume of the whole fall.
- Emotion in the tape. Traded volume during the decline reached 7.17x the trailing median — well past the 2x capitulation reference — concentrated on those two days.
- But half was drift. Roughly half the peak-to-trough loss came as event-free derating before Aug 5, so this is a hybrid, not a clean single-trigger dislocation.
Renewal engine
Both salesforces slipped below the renewal line
Wallet retention by salesforce (%)
Net wallet retention crossed below 100% in both books in FY2025.
- Renewals turned negative. Net wallet retention fell below the 100% expansion line in both salesforces for the first time in the window — technology sales to 96% (from 102%), business sales to 99% (from 106%).
- Growth decelerated five years straight. Total contract-value growth stepped down 16, 12, 8, 8, then 1% — the forward engine that has to carry the year-10 case has stalled.
- Part is a removable shock. A US-federal/DOGE book of ~$126M was less than half retained; ex-federal contract value was still growing ~3.5% in early FY2026, keeping the cyclical-vs-structural question open.
Durability
Revenue has not fallen in a decade
Revenue ($B)
- No down years. Revenue has risen every year for a decade, from $4.7B in FY2021 to $6.5B in FY2025; the three-consecutive-decline disqualifier is not tripped.
- Cash matched it. Adjusted free cash flow held a ~$1,034M five-year average with a ~12% coefficient of variation and no negative years — a genuinely stable base.
- The caveat is the window. That record is only about five years long; stretch it to FY2019 and the variability triples, because FY2019 adjusted FCF was just ~$321M in the CEB-integration era.
Damage math
Earnings held while the reported profit fell 42%
What actually moved, FY2024 → FY2025
| Metric | FY2024 | FY2025 |
|---|---|---|
| Adjusted operating income | $1,156M | $1,176M |
| Operating cash flow | $1,485M | $1,290M |
| Reported net income | $1,254M | $729M |
FY2025 adjusted operating income is ex the one-time $150M impairment.
- The numerator held. Strip the one-time $150M goodwill impairment and operating income was roughly flat at $1,176M; operating cash flow fell only 13%. The 42% drop in reported net income is largely one-off distortion.
- The market has already voted. A DCF-lite on FY2025 cash flow at a 10% discount rate puts the ~$140 price at the no-growth value and only ~$30 above the permanent-erosion case (~$110), versus a temporary NPV of ~$212.
- The diagnosis leans permanent. An adversarial trial put the odds the impairment is temporary at just 0.38; five straight years of decelerating contract value point to structural pressure, not a removable one-off.
Self-help
A record buyback, debt-funded into a falling knife
−16%
Diluted shares, FY2020–FY2025
$6.0B
Buybacks over five years
$239
FY2025 avg buy price vs ~$140 now
- A real repurchase engine. Executed cash buybacks of ~$6.0B over FY2021–FY2025 cut diluted shares 16%, from 90.0M to 75.6M, with a record $1,991M retired in FY2025 and $535M more in Q1 FY2026.
- Funded by debt, into the fall. The FY2025 buyback exceeded operating cash flow and was part-funded by $800M of new notes, lifting net debt to ~$1.26B and thinning equity to $320M.
- Timing risk. Q4-2025 open-market buys averaged $239 a share against ~$140 by mid-2026, so per-share value depends on whether the drawdown was mispricing or a rerating.
IVThe price
Yield vs bar
The yield sits just short of its bar
Adjusted FCF yield vs the bar (%)
Peak-era yield (FY2024)
2.7%
3-year average
10.0%
Current adjusted yield
9.6%
- Just short. A moderate balance sheet (net debt/EBITDA ~1.0x) sets the bar at 10%. Current adjusted FCF yield is 9.61% — about 39 bps below — and the three-year average, 9.96%, is ~4 bps short.
- Priced by the fall, not by growth. The yield is high only because market cap fell ~77%, from ~$45B at the peak (~2.7% yield) to $10.6B; free cash flow itself fell 15% in FY2025.
Forward path
Consensus needs FY2028 to clear the bar
Consensus FCF yield on today's market cap (%)
- Consensus backs the forward path. Street estimates put unadjusted FCF yield at 11.3–12.6% through FY2028, with the stock-comp-adjusted figure crossing the 10% bar by FY2028 (forward-path probability 0.62).
- But the step-up is deferred. Consensus assumes cash flow essentially flat FY2025–FY2027 with the decisive rise pushed to FY2028 — the last year of coverage — and the most recent actual FCF already fell 15%.
Re-rating math
No modeled path reaches a triple
DCF-lite value per share vs the 3x target ($)
DCF-lite on FY2025 FCF at a 10% discount rate.
- The target is out of reach. A 3x-in-3-years from $140 implies ~$421 a share. Even the temporary-diagnosis value (~$212, near the sell-side high) falls well short, and the permanent case (~$110) sits below today's price.
- What it would take. Reaching the target needs free cash flow to compound far faster than the temporary case assumes and consensus to concede a full re-acceleration of contract value to double digits.
What to watch
A real cash machine at a genuinely dislocated price; what fails is the ten-year durability the setup rests on.
- 01revenue declines for a third consecutive year
- 02share count inflects upward
- 03wallet retention keeps sliding or client (gross) retention breaks below the mid-80s
- 04ex-federal CV reaccelerates toward high-single/double digits
This distills a fixed fit test built pillar by pillar; the full report carries every citation and the two-sided diagnosis.
Compiled from the full report · 2026-07-30 · For information, not investment advice.