Gartner, Inc.ITNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $487.61 per share(market-calibrated)

+195.9%

Upside to Fair Value

Current

$164.78

Pure Model

$527.31

Fair Value

$487.61

Bull Case

$676.10

Bear Case

$408.80

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.50%

Calibrated Growth

2.61%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $527.31.

What's Driving This Ratingfor IT

✓

CapEx already efficient

CapEx at 1.50% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 21.16% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.4B (24.19% margin).

→

Moderate revenue growth

Analyst consensus projects 0.80% revenue growth, fading to 3.75% by Year 10. Revenue reaches $9.7B (vs $6.5B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 325bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 71.27% indicates efficient cash generation. FCF reaches $1.9B by Year 10 (19.43% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.04

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.16%

Cost of Debt

Pre-tax Cost of Debt3.43%

Tax Rate24.68%

After-tax Cost of Debt2.58%

Equity Weight (E/V)76.63%

Debt Weight (D/V)23.37%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (76.63% × 9.16%) + (23.37% × 2.58%)

= 7.62%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.5B	$7.4B	$8.1B	$8.7B	$9.7B
EBIT	$1.4B	$1.6B	$1.8B	$2.0B	$2.4B
Tax	$342M	$386M	$450M	$504M	$581M
NOPAT	$1.0B	$1.2B	$1.4B	$1.5B	$1.8B
+ Depreciation	$201M	$227M	$249M	$268M	$299M
- Capex	$98M	$111M	$122M	$131M	$146M
- Δ NWC	$5M	$49M	$29M	$31M	$35M
Free Cash Flow	$1.1B	$1.2B	$1.5B	$1.6B	$1.9B
Discount Factor	0.929	0.802	0.693	0.598	0.480
Present Value	$1.1B	$1.0B	$1.0B	$982M	$907M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.9B

Terminal Growth Rate3.75%

WACC7.62%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$50.6B

PV of Terminal Value$24.3B

Exit Multiple Method

Year 10 EBITDA$2.7B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$74.3B

PV of Terminal Value$35.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$9.9B

PV of Terminal Value$24.3B

Enterprise Value$34.2B

(-) Net Debt$1.9B

Equity Value$32.3B

Shares Outstanding72M

Price per Share$448.50

Exit Multiple Method

PV of Projected FCFs$9.9B

PV of Terminal Value$35.6B

Enterprise Value$45.5B

(-) Net Debt$1.9B

Equity Value$43.6B

Shares Outstanding72M

Price per Share$606.13

Pure Model Fair Value

$527.31

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
5.62%	$696.14	$754.92	$809.57	$775.94	$743.87
6.62%	$573.39	$601.58	$639.58	$693.59	$743.87
7.62%	$491.42	$507.32	$527.31	$553.24	$588.18
8.62%	$430.59	$440.47	$452.38	$467.00	$485.40
9.62%	$382.54	$389.09	$396.76	$405.86	$416.82

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$408.80

148.1% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.29

Base Case

$527.31

220.0% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.04

Bull Case

$676.10

310.3% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.88

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth0.80%

Year 3 Revenue Growth7.09%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin21.16%

Terminal EBIT Margin25.00%

Tax Rate24.68%

Historical Capex / Rev1.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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