IT Services & Consulting Stocks Q1 Teardown: Gartner (NYSE:IT) Vs The Rest

Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at Gartner (NYSE:IT) and its peers.

IT Services & Consulting companies stand to benefit from increasing enterprise demand for digital transformation, AI-driven automation, and cybersecurity resilience. Many enterprises can't attack these topics alone and need IT services and consulting on everything from technical advice to implementation. Challenges in meeting these needs will include finding talent in specialized and evolving IT fields. While AI and automation can enhance productivity, they also threaten to commoditize certain consulting functions. Another ongoing challenge will be pricing pressures from offshore IT service providers, which have lower labor costs and increasingly equal access to advanced technology like AI.

The 7 it services & consulting stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 1% while next quarter’s revenue guidance was in line.

In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged since the latest earnings results.

Gartner (NYSE:IT)

With over 2,500 research experts guiding organizations through complex technology landscapes, Gartner (NYSE:IT) provides research, advisory services, and conferences that help executives make better decisions about technology and other business priorities.

Gartner reported revenues of $1.53 billion, up 4.2% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ EPS estimates.

Gene Hall, Gartner’s Chairman and Chief Executive Officer, commented, “First quarter financial results were ahead of our expectations. Contract value grew 7%. In a dynamic world, we are managing our costs to deliver Adjusted EBITDA Margin ahead of our initial guidance while also investing for future growth. We continue to provide significant value to our clients and will emerge from the current environment even stronger.”

Gartner delivered the weakest performance against analyst estimates of the whole group. Interestingly, the stock is up 2.6% since reporting and currently trades at $438.36.

Is now the time to buy Gartner? Access our full analysis of the earnings results here, it’s free.

Best Q1: Grid Dynamics (NASDAQ:GDYN)

With engineering centers across the Americas, Europe, and India serving Fortune 1000 companies, Grid Dynamics (NASDAQ:GDYN) provides technology consulting, engineering, and analytics services to help large enterprises modernize their technology systems and business processes.

Grid Dynamics reported revenues of $100.4 million, up 25.8% year on year, outperforming analysts’ expectations by 2%. The business had a very strong quarter with a solid beat of analysts’ EPS estimates and full-year revenue guidance beating analysts’ expectations.

Grid Dynamics delivered the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 8.3% since reporting. It currently trades at $12.91.

Is now the time to buy Grid Dynamics? Access our full analysis of the earnings results here, it’s free.

Weakest Q1: ASGN (NYSE:ASGN)

Evolving from its roots in IT staffing to become a high-end technology consulting powerhouse, ASGN (NYSE:ASGN) provides specialized IT consulting services and staffing solutions to Fortune 1000 companies and U.S. federal government agencies.

ASGN reported revenues of $968.3 million, down 7.7% year on year, exceeding analysts’ expectations by 0.6%. Still, it was a slower quarter as it posted a miss of analysts’ EPS estimates.

ASGN delivered the slowest revenue growth in the group. As expected, the stock is down 8.5% since the results and currently trades at $53.55.

Read our full analysis of ASGN’s results here.

Kyndryl (NYSE:KD)

Born from IBM's managed infrastructure services business in a 2021 spinoff, Kyndryl (NYSE:KD) is the world's largest IT infrastructure services provider that designs, builds, and manages technology environments for enterprise customers.

Kyndryl reported revenues of $3.8 billion, down 1.3% year on year. This result beat analysts’ expectations by 0.8%. Aside from that, it was a mixed quarter as it also produced a decent beat of analysts’ EPS estimates but revenue guidance for next quarter slightly missing analysts’ expectations.

The stock is up 14.7% since reporting and currently trades at $38.

Read our full, actionable report on Kyndryl here, it’s free.

EPAM (NYSE:EPAM)

Founded in 1993 during the early days of offshore software development, EPAM Systems (NYSE:EPAM) provides digital engineering, cloud, and AI transformation services to help global enterprises and startups modernize their technology systems and create digital products.

EPAM reported revenues of $1.30 billion, up 11.7% year on year. This print topped analysts’ expectations by 1.6%. Overall, it was a very strong quarter as it also logged a solid beat of analysts’ constant currency revenue estimates.

The stock is up 10.4% since reporting and currently trades at $175.95.

Read our full, actionable report on EPAM here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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