IT Gartner
Priced for near-zero growth; buybacks plus a durable brand likely beat that, though AI clouds the moat.
The business
Gartner sells annual subscriptions to its research and advisory service to IT, finance, HR and other executives; this segment is about 80% of revenue and renews at high rates. It also runs paid-attendance and exhibitor conferences and a smaller consulting arm. The model is capital-light: clients pay upfront, so working capital is negative and free cash flow runs well above net income.
Quality gate · 94/100
Moat & management
| Moat | narrow moat |
| Source | intangible |
| Trajectory | eroding |
| Management | excellent |
Gartner's brand as the default 'nobody got fired for citing Gartner' reference, the Magic Quadrant's influence on vendor purchasing, and the peer network among its members all create real switching costs and pricing power. Generative AI now threatens the cheap end of that value (synthesis, benchmarking, quick answers), and recent contract-value growth stalling to low single digits suggests clients are testing whether they still need the seat. The brand survives, but its pricing power and seat growth are no longer assured.
They run the business with rigorous cost discipline, have steadily shrunk the share count (-3.6% a year), keep leverage modest, and have leaned hard into buybacks now that the stock is depressed. That is the right thing to do if the franchise holds. The risk is that they are underestimating structural AI pressure and treating it as cyclical.
Owner-earnings inputs
| Owner earnings (TTM) | 825.62M |
| Owner-earnings yield | 7.0% |
| Free-cash-flow yield | 10.7% |
| Growth used (normalized) | 5.0% |
| Market-implied growth (reverse DCF) | 1.2% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.5% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 866.90M | 5.0% | 791.48M |
| 2 | 909.01M | 4.9% | 757.73M |
| 3 | 951.86M | 4.7% | 724.42M |
| 4 | 995.37M | 4.6% | 691.64M |
| 5 | 1.04B | 4.4% | 659.43M |
| 6 | 1.08B | 4.3% | 627.87M |
| 7 | 1.13B | 4.1% | 596.99M |
| 8 | 1.17B | 4.0% | 566.86M |
| 9 | 1.22B | 3.9% | 537.51M |
| 10 | 1.26B | 3.7% | 508.98M |
| 11 | 1.31B | 3.6% | 481.29M |
| 12 | 1.35B | 3.4% | 454.49M |
| 13 | 1.40B | 3.3% | 428.58M |
| 14 | 1.44B | 3.1% | 403.60M |
| 15 | 1.49B | 3.0% | 379.54M |
Key risks
- Generative AI tools commoditize research synthesis and advisory, cutting seat counts and pricing power
- Contract value growth stays stuck at low single digits as enterprise and federal clients rationalize spend
- Salesforce productivity and retention decline, turning an operating-leverage model into negative leverage
Catalysts
- Contract value growth re-accelerates as AI-adoption advisory becomes a must-have executive need
- Aggressive buybacks at depressed prices compound per-share owner earnings even with flat revenue
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Price pays for ~1%/yr owner-earnings growth over 15y (reverse DCF); model credits 5%.