Strong And Under The Radar: Gartner (IT)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Gartner ( IT) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Gartner as such a stock due to the following factors:

  • IT has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $30.4 million.
  • IT is making at least a new 3-day high.
  • IT has a PE ratio of 45.
  • IT is mentioned 1.58 times per day on StockTwits.
  • IT has not yet been mentioned on StockTwits today.
  • IT is currently in the upper 20% of its 1-year range.
  • IT is in the upper 35% of its 20-day range.
  • IT is in the upper 45% of its 5-day range.
  • IT is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on IT:

Gartner, Inc. provides independent and objective research and analysis on the information technology (IT), computer hardware, software, communications, and related technology industries in the United States, Canada, Europe, the Middle East, Africa, and internationally. IT has a PE ratio of 45. Currently there are 3 analysts that rate Gartner a buy, no analysts rate it a sell, and 5 rate it a hold.

The average volume for Gartner has been 489,500 shares per day over the past 30 days. Gartner has a market cap of $7.3 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 0.89 and a short float of 2.8% with 5.95 days to cover. Shares are up 4.9% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Gartner as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and weak operating cash flow.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 22.5%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for GARTNER INC is rather high; currently it is at 62.27%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.01% trails the industry average.
  • Compared to its closing price of one year ago, IT's share price has jumped by 26.20%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the IT Services industry average. The net income has decreased by 24.9% when compared to the same quarter one year ago, dropping from $37.74 million to $28.35 million.
  • Net operating cash flow has significantly decreased to $5.66 million or 65.61% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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