Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Gartner, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 0.8% to 8.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 100, DPO 12, DIO 60). At a 8.2% WACC with mid-year discounting, the terminal value (78% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $213.72 per share, suggesting IT is undervalued by 37.0% at the current price of $156.02.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,103 | 1,164 | 1,246 | 1,349 | 1,460 | 1,497 |
| (−) Net Interest | 142 | 150 | 161 | 174 | 189 | 193 |
| (+) D&A | 98 | 108 | 109 | 113 | 120 | 123 |
| EBITDA | 1,343 | 1,422 | 1,516 | 1,637 | 1,768 | 1,813 |
| (−) Tax | 214 | 226 | 242 | 261 | 283 | — |
| (−) CapEx | 110 | 116 | 124 | 134 | 145 | — |
| (−) ΔWC | 432 | 115 | 155 | 192 | 208 | — |
| Free Cash Flow (FCF) | 587 | 966 | 996 | 1,048 | 1,132 | — |
| Peers' EBITDA Multiple | 11.0x | |||||
| Terminal Value | 20,012 | |||||
| WACC / Discount Rate | 8.23% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 564 | 858 | 817 | 795 | 793 | 13,475 |
| Enterprise Value | 17,302 | |||||
| Projection Period | 3,827 | 22.1% | ||||
| Terminal Value | 13,475 | 77.9% | ||||
| (−) Current Net Debt | 1,896 | |||||
| Equity Value | 15,406 | |||||
| (÷) Outstanding Shares | 72M | |||||
| Fair Price | $214 | +37.0% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.0x | 9.0x | 11.0x | 13.0x | 15.0x |
|---|---|---|---|---|---|
| 6.2% | $160 | $197 | $235 | $272 | $309 |
| 7.2% | $153 | $188 | $224 | $259 | $295 |
| 8.2% | $146 | $180 | $214 | $248 | $281 |
| 9.2% | $139 | $172 | $204 | $236 | $269 |
| 10.2% | $133 | $164 | $195 | $226 | $257 |
Current price: $156.02. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.