Intrinsic value of Gartner - IT

Previous Close

$140.93

  Intrinsic Value

$384.76

stock screener

  Rating & Target

str. buy

+173%

Previous close

$140.93

 
Intrinsic value

$384.76

 
Up/down potential

+173%

 
Rating

str. buy

We calculate the intrinsic value of IT stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 12.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  35.50
  32.45
  29.71
  27.23
  25.01
  23.01
  21.21
  19.59
  18.13
  16.82
  15.63
  14.57
  13.61
  12.75
  11.98
  11.28
  10.65
  10.09
  9.58
  9.12
  8.71
  8.34
  8.00
  7.70
  7.43
  7.19
  6.97
  6.77
  6.60
  6.44
Revenue, $m
  4,486
  5,942
  7,707
  9,806
  12,259
  15,080
  18,278
  21,859
  25,821
  30,164
  34,880
  39,962
  45,403
  51,193
  57,324
  63,790
  70,585
  77,704
  85,147
  92,912
  101,003
  109,424
  118,182
  127,286
  136,747
  146,578
  156,796
  167,416
  178,459
  189,946
Variable operating expenses, $m
  3,774
  4,859
  6,176
  7,741
  9,570
  11,674
  14,059
  16,729
  19,685
  22,923
  26,012
  29,802
  33,860
  38,178
  42,750
  47,572
  52,640
  57,949
  63,499
  69,291
  75,325
  81,605
  88,136
  94,925
  101,981
  109,313
  116,933
  124,853
  133,089
  141,655
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  3,774
  4,859
  6,176
  7,741
  9,570
  11,674
  14,059
  16,729
  19,685
  22,923
  26,012
  29,802
  33,860
  38,178
  42,750
  47,572
  52,640
  57,949
  63,499
  69,291
  75,325
  81,605
  88,136
  94,925
  101,981
  109,313
  116,933
  124,853
  133,089
  141,655
Operating income, $m
  713
  1,083
  1,532
  2,065
  2,689
  3,406
  4,219
  5,129
  6,137
  7,241
  8,868
  10,160
  11,543
  13,015
  14,574
  16,218
  17,945
  19,755
  21,647
  23,622
  25,679
  27,820
  30,046
  32,361
  34,766
  37,265
  39,863
  42,563
  45,371
  48,291
EBITDA, $m
  1,509
  1,999
  2,592
  3,298
  4,123
  5,072
  6,148
  7,352
  8,685
  10,145
  11,731
  13,441
  15,271
  17,218
  19,280
  21,455
  23,740
  26,135
  28,638
  31,250
  33,971
  36,803
  39,749
  42,811
  45,993
  49,300
  52,736
  56,308
  60,022
  63,886
Interest expense (income), $m
  23
  210
  352
  530
  744
  1,000
  1,298
  1,641
  2,031
  2,466
  2,948
  3,477
  4,050
  4,669
  5,331
  6,035
  6,781
  7,568
  8,395
  9,261
  10,166
  11,111
  12,096
  13,120
  14,186
  15,294
  16,445
  17,641
  18,884
  20,176
  21,520
Earnings before tax, $m
  503
  730
  1,002
  1,321
  1,689
  2,108
  2,578
  3,099
  3,671
  4,292
  5,391
  6,109
  6,874
  7,684
  8,539
  9,436
  10,377
  11,361
  12,386
  13,455
  14,567
  15,724
  16,926
  18,175
  19,472
  20,821
  22,222
  23,679
  25,195
  26,771
Tax expense, $m
  136
  197
  271
  357
  456
  569
  696
  837
  991
  1,159
  1,456
  1,650
  1,856
  2,075
  2,305
  2,548
  2,802
  3,067
  3,344
  3,633
  3,933
  4,245
  4,570
  4,907
  5,258
  5,622
  6,000
  6,393
  6,803
  7,228
Net income, $m
  367
  533
  731
  964
  1,233
  1,539
  1,882
  2,262
  2,680
  3,133
  3,935
  4,460
  5,018
  5,609
  6,233
  6,889
  7,575
  8,293
  9,042
  9,822
  10,634
  11,478
  12,356
  13,268
  14,215
  15,199
  16,222
  17,286
  18,392
  19,543

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  9,860
  13,060
  16,939
  21,553
  26,943
  33,143
  40,172
  48,041
  56,750
  66,294
  76,659
  87,829
  99,786
  112,511
  125,987
  140,198
  155,132
  170,779
  187,136
  204,203
  221,985
  240,493
  259,741
  279,749
  300,542
  322,150
  344,606
  367,948
  392,219
  417,464
Adjusted assets (=assets-cash), $m
  9,860
  13,060
  16,939
  21,553
  26,943
  33,143
  40,172
  48,041
  56,750
  66,294
  76,659
  87,829
  99,786
  112,511
  125,987
  140,198
  155,132
  170,779
  187,136
  204,203
  221,985
  240,493
  259,741
  279,749
  300,542
  322,150
  344,606
  367,948
  392,219
  417,464
Revenue / Adjusted assets
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
  0.455
Average production assets, $m
  3,683
  4,879
  6,328
  8,051
  10,065
  12,381
  15,006
  17,946
  21,199
  24,764
  28,636
  32,809
  37,275
  42,029
  47,063
  52,372
  57,950
  63,795
  69,906
  76,281
  82,924
  89,837
  97,027
  104,502
  112,269
  120,341
  128,729
  137,449
  146,515
  155,946
Working capital, $m
  -902
  -1,194
  -1,549
  -1,971
  -2,464
  -3,031
  -3,674
  -4,394
  -5,190
  -6,063
  -7,011
  -8,032
  -9,126
  -10,290
  -11,522
  -12,822
  -14,188
  -15,619
  -17,115
  -18,675
  -20,302
  -21,994
  -23,755
  -25,584
  -27,486
  -29,462
  -31,516
  -33,651
  -35,870
  -38,179
Total debt, $m
  5,508
  8,275
  11,631
  15,622
  20,285
  25,647
  31,727
  38,534
  46,068
  54,323
  63,288
  72,950
  83,293
  94,301
  105,958
  118,250
  131,167
  144,702
  158,851
  173,614
  188,996
  205,005
  221,654
  238,961
  256,948
  275,638
  295,063
  315,254
  336,248
  358,085
Total liabilities, $m
  8,529
  11,297
  14,653
  18,643
  23,306
  28,669
  34,749
  41,555
  49,089
  57,344
  66,310
  75,972
  86,315
  97,322
  108,979
  121,271
  134,189
  147,724
  161,873
  176,636
  192,017
  208,026
  224,676
  241,983
  259,969
  278,660
  298,084
  318,275
  339,269
  361,106
Total equity, $m
  1,331
  1,763
  2,287
  2,910
  3,637
  4,474
  5,423
  6,486
  7,661
  8,950
  10,349
  11,857
  13,471
  15,189
  17,008
  18,927
  20,943
  23,055
  25,263
  27,567
  29,968
  32,467
  35,065
  37,766
  40,573
  43,490
  46,522
  49,673
  52,950
  56,358
Total liabilities and equity, $m
  9,860
  13,060
  16,940
  21,553
  26,943
  33,143
  40,172
  48,041
  56,750
  66,294
  76,659
  87,829
  99,786
  112,511
  125,987
  140,198
  155,132
  170,779
  187,136
  204,203
  221,985
  240,493
  259,741
  279,749
  300,542
  322,150
  344,606
  367,948
  392,219
  417,464
Debt-to-equity ratio
  4.140
  4.690
  5.090
  5.370
  5.580
  5.730
  5.850
  5.940
  6.010
  6.070
  6.120
  6.150
  6.180
  6.210
  6.230
  6.250
  6.260
  6.280
  6.290
  6.300
  6.310
  6.310
  6.320
  6.330
  6.330
  6.340
  6.340
  6.350
  6.350
  6.350
Adjusted equity ratio
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135
  0.135

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  367
  533
  731
  964
  1,233
  1,539
  1,882
  2,262
  2,680
  3,133
  3,935
  4,460
  5,018
  5,609
  6,233
  6,889
  7,575
  8,293
  9,042
  9,822
  10,634
  11,478
  12,356
  13,268
  14,215
  15,199
  16,222
  17,286
  18,392
  19,543
Depreciation, amort., depletion, $m
  796
  916
  1,061
  1,233
  1,434
  1,666
  1,929
  2,222
  2,548
  2,904
  2,864
  3,281
  3,728
  4,203
  4,706
  5,237
  5,795
  6,380
  6,991
  7,628
  8,292
  8,984
  9,703
  10,450
  11,227
  12,034
  12,873
  13,745
  14,652
  15,595
Funds from operations, $m
  1,163
  1,449
  1,792
  2,197
  2,667
  3,205
  3,810
  4,485
  5,227
  6,038
  6,799
  7,741
  8,746
  9,812
  10,939
  12,126
  13,370
  14,673
  16,033
  17,450
  18,927
  20,462
  22,059
  23,718
  25,442
  27,233
  29,095
  31,031
  33,044
  35,138
Change in working capital, $m
  -236
  -293
  -355
  -422
  -493
  -567
  -643
  -720
  -797
  -873
  -948
  -1,022
  -1,094
  -1,164
  -1,232
  -1,300
  -1,366
  -1,431
  -1,496
  -1,561
  -1,626
  -1,693
  -1,760
  -1,830
  -1,902
  -1,976
  -2,054
  -2,135
  -2,220
  -2,309
Cash from operations, $m
  1,400
  1,742
  2,147
  2,619
  3,160
  3,772
  4,453
  5,204
  6,024
  6,911
  7,747
  8,762
  9,839
  10,976
  12,172
  13,425
  14,736
  16,104
  17,529
  19,011
  20,553
  22,155
  23,819
  25,548
  27,343
  29,209
  31,149
  33,165
  35,263
  37,446
Maintenance CAPEX, $m
  -272
  -368
  -488
  -633
  -805
  -1,006
  -1,238
  -1,501
  -1,795
  -2,120
  -2,476
  -2,864
  -3,281
  -3,728
  -4,203
  -4,706
  -5,237
  -5,795
  -6,380
  -6,991
  -7,628
  -8,292
  -8,984
  -9,703
  -10,450
  -11,227
  -12,034
  -12,873
  -13,745
  -14,652
New CAPEX, $m
  -964
  -1,195
  -1,449
  -1,723
  -2,014
  -2,316
  -2,626
  -2,939
  -3,253
  -3,565
  -3,872
  -4,173
  -4,467
  -4,754
  -5,034
  -5,309
  -5,578
  -5,845
  -6,110
  -6,375
  -6,643
  -6,914
  -7,190
  -7,474
  -7,767
  -8,072
  -8,389
  -8,720
  -9,066
  -9,431
Cash from investing activities, $m
  -1,236
  -1,563
  -1,937
  -2,356
  -2,819
  -3,322
  -3,864
  -4,440
  -5,048
  -5,685
  -6,348
  -7,037
  -7,748
  -8,482
  -9,237
  -10,015
  -10,815
  -11,640
  -12,490
  -13,366
  -14,271
  -15,206
  -16,174
  -17,177
  -18,217
  -19,299
  -20,423
  -21,593
  -22,811
  -24,083
Free cash flow, $m
  163
  178
  210
  263
  342
  449
  589
  764
  976
  1,226
  1,399
  1,726
  2,092
  2,495
  2,935
  3,411
  3,920
  4,464
  5,039
  5,645
  6,282
  6,949
  7,645
  8,371
  9,126
  9,911
  10,726
  11,573
  12,452
  13,364
Issuance/(repayment) of debt, $m
  2,229
  2,768
  3,356
  3,991
  4,663
  5,363
  6,080
  6,807
  7,534
  8,255
  8,966
  9,662
  10,343
  11,007
  11,657
  12,292
  12,917
  13,535
  14,149
  14,763
  15,382
  16,009
  16,649
  17,307
  17,986
  18,691
  19,424
  20,191
  20,994
  21,837
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,229
  2,768
  3,356
  3,991
  4,663
  5,363
  6,080
  6,807
  7,534
  8,255
  8,966
  9,662
  10,343
  11,007
  11,657
  12,292
  12,917
  13,535
  14,149
  14,763
  15,382
  16,009
  16,649
  17,307
  17,986
  18,691
  19,424
  20,191
  20,994
  21,837
Total cash flow (excl. dividends), $m
  2,392
  2,946
  3,566
  4,254
  5,004
  5,812
  6,670
  7,571
  8,510
  9,481
  10,364
  11,388
  12,435
  13,502
  14,592
  15,703
  16,838
  17,999
  19,188
  20,408
  21,664
  22,958
  24,294
  25,678
  27,112
  28,602
  30,151
  31,764
  33,446
  35,202
Retained Cash Flow (-), $m
  -348
  -432
  -524
  -623
  -728
  -837
  -949
  -1,062
  -1,176
  -1,288
  -1,399
  -1,508
  -1,614
  -1,718
  -1,819
  -1,918
  -2,016
  -2,112
  -2,208
  -2,304
  -2,401
  -2,499
  -2,598
  -2,701
  -2,807
  -2,917
  -3,032
  -3,151
  -3,277
  -3,408
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  79
  108
  143
  185
  235
  294
  362
  439
  525
  620
  724
  837
  959
  1,090
  1,229
  1,376
  1,531
  1,694
  1,865
  2,044
  2,230
  2,424
  2,626
  2,836
  3,055
  3,282
  3,518
  3,763
  4,018
  4,283
Cash available for distribution, $m
  2,044
  2,514
  3,042
  3,631
  4,277
  4,975
  5,721
  6,508
  7,334
  8,192
  8,965
  9,880
  10,820
  11,785
  12,772
  13,785
  14,822
  15,886
  16,979
  18,104
  19,263
  20,459
  21,696
  22,977
  24,305
  25,684
  27,119
  28,613
  30,169
  31,794
Discount rate, %
  9.20
  9.66
  10.14
  10.65
  11.18
  11.74
  12.33
  12.95
  13.59
  14.27
  14.99
  15.74
  16.52
  17.35
  18.22
  19.13
  20.08
  21.09
  22.14
  23.25
  24.41
  25.63
  26.91
  28.26
  29.67
  31.15
  32.71
  34.35
  36.07
  37.87
PV of cash for distribution, $m
  1,872
  2,090
  2,276
  2,422
  2,517
  2,556
  2,535
  2,458
  2,329
  2,158
  1,930
  1,711
  1,482
  1,255
  1,038
  838
  660
  507
  380
  277
  196
  135
  90
  59
  37
  22
  13
  7
  4
  2
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Gartner, Inc. is an information technology research and advisory company. The Company works with clients to research, analyze and interpret the business of information technology (IT), supply chain and marketing within the context of their individual roles. It operates in three segments: Research, Consulting and Events. Research segment consists of subscription-based research products, access to research inquiry, peer networking services and membership programs. Consulting segment consists of consulting, measurement engagements and strategic advisory services. Events segment consists of various symposia, conferences and exhibitions. It provides insight through reports, briefings, tools, access to its analysts, peer networking services and membership programs that enable its clients to make decisions about their IT, supply chain and digital marketing initiatives. Its consultants provide fact-based consulting services to help clients use and manage IT to optimize business performance.

FINANCIAL RATIOS  of  Gartner (IT)

Valuation Ratios
P/E Ratio 60
Price to Sales 4.8
Price to Book 190.9
Price to Tangible Book
Price to Cash Flow 31.8
Price to Free Cash Flow 36.9
Growth Rates
Sales Growth Rate 13%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 8.7%
Cap. Spend. - 3 Yr. Gr. Rate 6.2%
Financial Strength
Quick Ratio 16
Current Ratio 0.1
LT Debt to Equity 1088.5%
Total Debt to Equity 1137.7%
Interest Coverage 14
Management Effectiveness
Return On Assets 9.2%
Ret/ On Assets - 3 Yr. Avg. 9.6%
Return On Total Capital 26.9%
Ret/ On T. Cap. - 3 Yr. Avg. 29.2%
Return On Equity -546.5%
Return On Equity - 3 Yr. Avg. 245.9%
Asset Turnover 1.1
Profitability Ratios
Gross Margin 61.3%
Gross Margin - 3 Yr. Avg. 61%
EBITDA Margin 15.3%
EBITDA Margin - 3 Yr. Avg. 15.7%
Operating Margin 12.5%
Oper. Margin - 3 Yr. Avg. 13.3%
Pre-Tax Margin 11.8%
Pre-Tax Margin - 3 Yr. Avg. 12.7%
Net Profit Margin 7.9%
Net Profit Margin - 3 Yr. Avg. 8.4%
Effective Tax Rate 32.6%
Eff/ Tax Rate - 3 Yr. Avg. 33.7%
Payout Ratio 0%

IT stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the IT stock intrinsic value calculation we used $3311 million for the last fiscal year's total revenue generated by Gartner. The default revenue input number comes from 2017 income statement of Gartner. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our IT stock valuation model: a) initial revenue growth rate of 35.5% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 9.2%, whose default value for IT is calculated based on our internal credit rating of Gartner, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Gartner.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of IT stock the variable cost ratio is equal to 87.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for IT stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 6.4% for Gartner.

Corporate tax rate of 27% is the nominal tax rate for Gartner. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the IT stock is equal to 2.4%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for IT are equal to 82.1%.

Life of production assets of 10 years is the average useful life of capital assets used in Gartner operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for IT is equal to -20.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $983 million for Gartner - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 88 million for Gartner is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Gartner at the current share price and the inputted number of shares is $12.4 billion.

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