At US$457, Is Gartner, Inc. (NYSE:IT) Worth Looking At Closely?

Today we're going to take a look at the well-established Gartner, Inc. (NYSE:IT). The company's stock saw a significant share price rise of 40% in the past couple of months on the NYSE. The company is now trading at yearly-high levels following the recent surge in its share price. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Gartner’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

Check out our latest analysis for Gartner

What Is Gartner Worth?

According to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 38.31x is currently well-above the industry average of 22.75x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Gartner’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Gartner look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a relatively muted profit growth of 3.1% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Gartner, at least in the short term.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in IT’s outlook, with shares trading above industry price multiples. At this current price, shareholders may be asking a different question – should I sell? If you believe IT should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on IT for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive growth outlook may mean it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Gartner, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 2 warning signs with Gartner, and understanding these should be part of your investment process.

If you are no longer interested in Gartner, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.