Last update on 2024-06-05

Gartner (IT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

Check out the 2023 Piotroski F-Score analysis for Gartner (IT). Discover detailed insights into profitability, liquidity, and operating efficiency.

Short Analysis - Piotroski Score: 8

We're running Gartner (IT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Gartner, represented by the ticker IT, was evaluated using the Piotroski F-Score, a measure of a company's financial strength based on nine indicators related to profitability, liquidity, and operational efficiency. Gartner scored an 8 out of 9, indicating strong financial health. The company's positive net income and consistent increase over 20 years in metrics like net income, CFO, and ROA are solid signals of robust profitability. Additionally, Gartner's decreasing financial leverage and increasing current ratio reflect improved liquidity, though the current ratio remains below the industry median. The stock showed reduced outstanding shares, suggesting stock buybacks that could benefit investor value. Although Gartner's gross margin decreased slightly, their asset turnover ratio grew, indicating improved operational efficiency.

Insights for Value Investors Seeking Stable Income

With a Piotroski F-Score of 8, Gartner demonstrates strong financial health along multiple fronts, including profitability, liquidity, and operating efficiency. This high score suggests that Gartner is a resilient and fundamentally sound investment and is recommended for further consideration by potential investors. However, it is worth noting that while the company’s gross margin decreased, most other metrics are positive, making Gartner a solid candidate for investors looking for stability and growth potential.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Gartner (IT)

Company has a positive net income?

Net income is a key profitability metric indicating how much profit a company generates after covering its expenses. A positive net income suggests financial health.

For Gartner (IT) in 2023, the net income stands at $882,466,000, which is positive, thereby adding 1 point in the Piotroski analysis. Over the last 20 years, the net income trend has generally been positive, with few exceptions such as in 2005 (-$2.44 million). The recent years show a consistent increase, indicating robust profitability and sound financial management, which is a positive indicator for investors.

Company has a positive cash flow?

Cash flow from operations (CFO) refers to the cash generated by a company’s regular operating activities. It's important because it indicates the ability of a company to generate sufficient positive cash flow to maintain and grow its operations. Positive CFO is a strong indicator of a company's financial health.

For Gartner (IT), the CFO for the year 2023 is $1,155,737,000, which is positive. This earns the company 1 point under the Piotroski analysis criterion. Historically, Gartner has shown a consistent increase in CFO over the past 20 years, peaking at $1,312,470,000 in 2021. The upward trend, aside from slight variations, underscores a strong, operationally efficient firm. This sustained positive trend indicates that Gartner has been successful in generating cash through its primary business operations, rather than relying on external financing or other activities. Hence, Gartner's financial health in terms of operating cash flow appears robust.

Return on Assets (ROA) are growing?

Comparing the Return on Assets (ROA) year over year helps in understanding the efficiency of Gartner (IT) in utilizing its assets to generate earnings.

For 2023, Gartner's ROA is 0.1166 compared to 0.1098 in 2022. This 0.0068 increase in ROA is positive, indicating better efficiency in asset utilization. When benchmarked against the industry median, which has shown a generally decreasing trend from 0.3304 in 2003 to 0.3391 in 2023, Gartner's improving ROA is still significantly below the industry standard. The uptrend in Gartner’s ROA earns it a score of 1, reflecting earnings growth efficiency outpacing past performance but still indicating room for improvement against industry peers.

Operating Cashflow are higher than Netincome?

The Operating Cash Flow (OCF) is higher than Net Income. This shows company's operations are generating enough cash flow to cover net income, minimizing accounting adjustments or accruals.

For 2023, Gartner (IT) generated an Operating Cash Flow (OCF) of $1,155,737,000 compared to a Net Income of $882,466,000. This gives Gartner a point in the Piotroski analysis for this criterion as the OCF surpasses Net Income, which is a positive indicator of financial health. This trend suggests robust operational efficiency and effective cash management. Over the past 20 years, Gartner's OCF has generally shown an upward trend, highlighting a balance of increasing income with strong cash flow from operations. For instance, 2003 had an OCF of $136,337,000 versus a Net Income of $23,693,000, demonstrating a consistent pattern of higher cash flows that builds investor confidence.

Liquidity of Gartner (IT)

Leverage is declining?

Change in Leverage refers to the company's debt level. A decrease in leverage typically signals less financial risk, while an increase indicates higher risk.

The Leverage for Gartner slightly decreased from 0.4179 in 2022 to 0.378 in 2023, indicating a reduction in financial risk. Historically, leverage has fluctuated, with peaks in 2015 and 2021. The decrease aligns with a trend of further stabilizing the financial structure, adding 1 point to the Piotroski score.

Current Ratio is growing?

The current ratio measures a company's ability to pay its short-term obligations with its short-term assets. A higher current ratio indicates better liquidity.

Comparing the current ratio for Gartner from 2022 (0.7744) to 2023 (0.9074), we observe an increase. This upward trend is positive and suggests improved liquidity for the company in 2023. Despite the year-on-year increase, Gartner’s current ratio remains below the 2023 industry median of 1.4169. Looking at the last 20 years, Gartner’s highest current ratio was in 2003 at 1.1188, and the lowest was in 2018 at 0.6913, indicating that although recent figures have improved, there is still considerable room for growth to align more closely with industry standards. In conclusion, Gartner earns 1 point for this criterion as their current ratio has increased in 2023.

Number of shares not diluted?

Change in Shares Outstanding measures the change in a company's number of issued shares over time. It is a key element as reduced outstanding shares can denote stock buybacks, signaling management’s belief in the firm's undervaluation, potentially increasing shareholder value.

The Outstanding Shares for Gartner (IT) decreased from 80,178,000 in 2022 to 79,004,000 in 2023. This negative trend means that the number of outstanding shares has fallen, suggesting that potential stock buybacks might have been initiated by the company. Over the last 20 years, the peak in outstanding shares was observed in 2004 (126,326,000) while a general declining trend can be noted up to 2023. This decline in 2023 adds a Piotroski score of 1 point.

Operating of Gartner (IT)

Cross Margin is growing?

The change in Gross Margin measures profitability. A higher margin indicates better cost control and pricing power, essential for competitive advantage.

In 2023, Gartner's Gross Margin was 0.6778, a decline from the previous year's 0.6907. This reduction suggests worsening cost control or pricing pressure, thus earning 0 points in the Piotroski analysis. Historically, though Gartner outperforms the industry median, this drop from a high of 0.695 in 2021.

Asset Turnover Ratio is growing?

Asset Turnover measures the efficiency of a company in using its assets to generate revenue. An increasing ratio indicates better performance.

Comparing Gartner's Asset Turnover in 2023 (0.7805) with 2022 (0.7442), the ratio has increased. This improvement translates to 1 Piotroski point, signaling enhanced efficiency in asset utilization. Analyzing historical data, Gartner's turnover ratio spiked around the early 2010s, peaking at 1.1491 in 2008. The post-2016 trend shows volatility, hitting lows like 0.5667 in 2020 before the recent uptick to 0.7805. Overall, the increase in 2023 is a positive sign, consistent with recovery and better management.