Over the past six months, Gartner’s shares (currently trading at $422.90) have posted a disappointing 18.1% loss while the S&P 500 was flat. This might have investors contemplating their next move.

Given the weaker price action, is now the time to buy IT? Find out in our full research report, it’s free.

Why Do Investors Watch Gartner?

With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.

Three Positive Attributes:

1. Constant Currency Revenue Drives Growth

In addition to reported revenue, constant currency revenue is a useful data point for analyzing IT Services & Consulting companies. This metric excludes currency movements, which are outside of Gartner’s control and are not indicative of underlying demand.

Over the last two years, Gartner’s constant currency revenue averaged 7.3% year-on-year growth. This performance was solid and shows it can expand steadily on a global scale regardless of the macroeconomic environment.

2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Gartner has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 20.8% over the last five years.

3. New Investments Bear Fruit as ROIC Jumps

ROIC, or return on invested capital, is a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Gartner’s ROIC has increased significantly over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.

Final Judgment

Gartner possesses several positive attributes. After the recent drawdown, the stock trades at 32.3× forward price-to-earnings (or $422.90 per share). Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

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