Could Gartner Stock’s Cash Flow Spark the Next Rally?

We think Gartner (IT) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.

What Is Happening With IT

IT stock is available at a significant discount to its 3-month, 1-year, and 2-year highs. This can be attributed to cautious enterprise spending and extended buying cycles, alongside challenges in U.S. federal contract renewals through 2025. The Q4 2025 revenue of $1.75 billion slightly missed estimates, with global contract value growing a modest 1%.

The stock may not reflect it yet, but here is what’s going well for the company: Gartner’s AskGartner AI tool is driving higher client renewal rates, showing strong product momentum. Advanced bookings provide solid visibility for much of its 2026 guided revenue, and management anticipates contract value to accelerate throughout 2026. The company generated $1.2 billion in free cash flow in 2025 and is guiding for over $1.1 billion in 2026. Gartner also repurchased $2.0 billion of stock in 2025, reducing its share count by 8%.

IT Has Strong Fundamentals

• Cash Yield: Gartner offers an impressive cash flow yield of 10.3%.
• Growing: Revenue growth of 5.2% over the last twelve months means that the cash pile is going to grow.
• Valuation Discount: IT stock is currently trading at 38% below its 3-month high, 71% below its 1-year high, and 71% below its 2-year high.

Below is a quick comparison of IT fundamentals with S&P medians.

*LTM: Last Twelve Months

But What About The Risk Involved?

While IT stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. Tech stocks took some serious hits in past crashes. During the Dot-Com Bubble, the drop was over 75%. The Global Financial Crisis saw a 70% plunge, and the Covid pandemic dragged prices down nearly 50%. Even the smaller shocks weren’t kind: the 2018 correction knocked about 26%, and the inflation shock sliced around 34%. Strong fundamentals matter, but when the market turns sour, big dips are hard to avoid. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read IT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

If you want to see more details, read Buy or Sell IT Stock.

Other Stocks Like IT

Not ready to act on IT? You could consider these alternatives:

1. Oracle (ORCL)
2. Netflix (NFLX)
3. AppLovin (APP)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Positive revenue growth
3. High free cash flow yield
4. Meaningful discount to 3M, 1Y, and 2Y highs

A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:

• Average 6-month and 12-month forward returns of 25.7% and 57.9% respectively
• Win rate (percentage of picks returning positive) of >70% for both 6-month and 12-month periods

Stock Picking Falls Short Against Multi Asset Portfolios

Individual stocks can soar or tank, but multi-asset exposure steadies the ride. A spread-out portfolio captures upside while limiting the damage from any one market.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices