Gartner (IT): Evaluating Valuation Following $1 Billion Expansion of Share Buyback Program

Gartner (IT) just announced it is increasing the size of its equity buyback program by $1,000 million, bringing the total authorization to $7,000 million. For investors, moves like this often catch attention because share repurchases can reflect management’s confidence in long-term prospects and typically improve shareholder returns by reducing the share count. Whether this signals a shift in the company’s strategy or simply reinforces Gartner’s ongoing capital allocation approach, it is the kind of event that sparks conversations about what comes next for the stock.

Looking over the past year, Gartner’s share price has seen some turbulence, falling roughly 52% from its level a year ago and down close to 49% year-to-date. Performance over the past month shows a modest rebound, but momentum has faded since earlier periods. In the broader context, annual revenue growth sits at just under 5%, while net income has contracted, reflecting a more mixed financial backdrop even as the company authorizes greater buybacks.

With buybacks now ramping up at a time when the stock has struggled, is Gartner trading at a discount, or is the market simply pricing in tempered future growth prospects?

Most Popular Narrative: 17.7% Undervalued

The most widely followed narrative sees Gartner as notably undervalued, with analysts setting a fair value that is significantly higher than the current price.

"Ongoing investments in expanding proprietary datasets, refining digital delivery platforms, and upskilling client-facing staff on trending topics (like AI and cost optimization) are expected to enhance Gartner's value proposition and support long-term customer lifetime value, bolstering both top-line growth and operating margins."

Want to know the growth engine driving this bullish valuation? This story hints at margin expansion, evolving product innovations, and future-fueled recurring revenue. Yet the critical financial benchmarks behind that target remain just out of sight. Curious which projections and assumptions put such a premium on Gartner’s future? There is more to this narrative’s math than meets the eye.

Result: Fair Value of $300.60 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, risks remain because generative AI competition and tighter client spending could challenge Gartner’s subscription growth and put pressure on future earnings.

Find out about the key risks to this Gartner narrative.

Another View: The SWS DCF Model's Take

While analysts see Gartner as undervalued based on growth expectations and future earnings, our DCF model challenges that optimism by suggesting the stock could actually be trading above its fair value. Which approach better fits the reality ahead?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Gartner for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Gartner Narrative

If you have a different perspective or prefer forming your own insights, it only takes a few minutes to shape your personal Gartner thesis. Do it your way.

A great starting point for your Gartner research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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