Capgemini (CGEMY) AI Stock Analysis

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Capgemini

(OTC:CGEMY)

74Outperform

Capgemini's strong financial performance is a significant positive factor, supported by consistent growth and solid cash flow generation. However, technical analysis indicates bearish trends, and the lack of new earnings call insights or notable corporate events limits upward potential. The valuation appears reasonable, balancing growth prospects with investor returns.

Capgemini (CGEMY) vs. S&P 500 (SPY)

Market Cap

$24.87B

Dividend Yield1.72%

Average Volume (3M)20.82K

Price to Earnings (P/E)13.7

Beta (1Y)1.08

Revenue Growth1.00%

EPS Growth3.88%

CountryUS

Employees341,118

SectorTechnology

Sector Strength51

IndustryInformation Technology Services

Share Statistics

EPS (TTM)2.12

Shares Outstanding856,737,370

10 Day Avg. Volume62,447

30 Day Avg. Volume20,815

Financial Highlights & Ratios

PEG Ratio11.39

Price to Book (P/B)N/A

Price to Sales (P/S)1.29

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Capgemini Business Overview & Revenue Model

Company DescriptionCapgemini SE is a global leader in consulting, technology services, and digital transformation. Operating in more than 50 countries, the company partners with organizations to address their business challenges and drive innovation. Capgemini's core services include strategy and transformation, applications and technology, and operations and engineering, with an emphasis on leveraging digital technologies such as cloud, data, artificial intelligence, and cybersecurity to optimize business performance.

How the Company Makes MoneyCapgemini makes money primarily through its consulting, technology, and outsourcing services. The company generates revenue by providing a range of services including business strategy consulting, systems integration, application development and management, and IT infrastructure management. Key revenue streams for Capgemini include consulting fees, project-based contracts, and long-term managed services agreements. Additionally, Capgemini has significant partnerships with leading technology companies, allowing it to offer comprehensive solutions combining technology platforms with its own consulting expertise. Factors such as the growing demand for digital transformation, cloud solutions, and cybersecurity services significantly contribute to its earnings.

Capgemini Financial Statement Overview

Summary

Capgemini demonstrates strong financial performance with consistent revenue growth and solid profitability margins. The company maintains a stable balance sheet with moderate leverage and efficient equity use. Cash flow generation is robust, supporting financial stability and future growth potential.

Income Statement

Very Positive

Capgemini has demonstrated strong revenue growth with a consistent upward trajectory over the past five years, achieving a 2.4% increase from 2022 to 2023. The company maintains healthy profitability metrics with a gross profit margin of 26.85% and a net profit margin of 7.38% for the year 2023. EBIT and EBITDA margins also show robust performance at 10.42% and 14.16% respectively. These figures highlight stable operational efficiency and profitability.

Balance Sheet

Positive

The company's balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.63, indicating moderate leverage. Capgemini's return on equity stands at 15.90%, showcasing efficient use of shareholder equity to generate profits. The equity ratio is 42.33%, providing a strong equity base relative to total assets, although slightly affected by a notable total debt level.

Cash Flow

Positive

Capgemini exhibits a strong cash flow position with consistent free cash flow generation, evidenced by a 1.75% growth in free cash flow from 2022 to 2023. The operating cash flow to net income ratio of 1.52 indicates solid cash generation capability relative to net income. The free cash flow to net income ratio is 1.36, further supporting the company's ability to convert earnings into cash.

TTM	Dec 2023	Dec 2022	Dec 2021	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
22.23B	22.52B	22.00B	18.16B	15.85B	14.13B
	Gross Profit
5.80B	6.05B	5.83B	4.79B	4.14B	3.85B
	EBIT
2.49B	2.35B	2.39B	1.84B	1.50B	1.43B
	EBITDA
2.25B	3.19B	3.14B	2.53B	2.18B	2.01B
	Net Income Common Stockholders
1.69B	1.66B	1.55B	1.16B	957.00M	856.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.38B	3.70B	4.19B	3.51B	3.17B	2.67B
	Total Assets
9.97B	24.70B	25.48B	24.03B	21.95B	18.14B
	Total Debt
1.31B	6.59B	7.55B	7.64B	9.05B	4.09B
	Net Debt
-1.06B	3.06B	3.75B	4.51B	6.21B	1.63B
	Total Liabilities
5.66B	14.23B	15.74B	15.55B	15.84B	9.72B
	Stockholders Equity
4.31B	10.45B	9.73B	8.47B	6.10B	8.42B
Cash Flow		Free Cash Flow
2.48B	2.27B	2.23B	2.31B	1.46B	1.57B
	Operating Cash Flow
2.75B	2.52B	2.52B	2.58B	1.66B	1.79B
	Investing Cash Flow
-455.00M	-383.00M	-659.00M	-678.00M	-1.71B	-868.00M
	Financing Cash Flow
-2.93B	-2.31B	-1.12B	-1.75B	562.00M	-468.00M

Capgemini Technical Analysis

Technical Analysis Sentiment

Negative

Last Price29.52

Price Trends

50DMA

32.39

Negative

100DMA

32.73

Negative

200DMA

36.32

Negative

Market Momentum

MACD

-1.11

Negative

RSI

46.07

Neutral

STOCH

68.12

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CGEMY, the sentiment is Negative. The current price of 29.52 is below the 20-day moving average (MA) of 29.93, below the 50-day MA of 32.39, and below the 200-day MA of 36.32, indicating a bearish trend. The MACD of -1.11 indicates Negative momentum. The RSI at 46.07 is Neutral, neither overbought nor oversold. The STOCH value of 68.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CGEMY.

Capgemini Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACN	75 Outperform	$181.42B	23.91	27.26%	1.91%	4.10%	9.78%
INFY	75 Outperform	$68.09B	21.14	33.16%	2.44%	3.08%	11.92%
CGEMY	74 Outperform	$24.87B	13.75	15.23%	1.72%	1.00%	3.88%
WIT	68 Neutral	$29.18B	26.61	16.59%	2.15%	-3.41%	67.87%
IBM	67 Neutral	$221.67B	37.20	24.14%	2.79%	1.45%	-20.56%
Sector *	58 Neutral	$11.04B	9.83	-6.56%	3.16%	7.59%	-10.43%
DXC	47 Neutral	$2.66B	267.98	-2.46%	―	-5.65%	78.20%

* Technology Sector Average

Performance Comparison

CGEMY

Capgemini

29.52

-13.58

-31.51%

ACN

Accenture

288.66

-19.80

-6.42%

INFY

Infosys

17.03

0.44

2.65%

IBM

International Business Machines

240.70

62.93

35.40%

WIT

Wipro

2.82

0.24

9.30%

DXC

DXC Technology

14.82

-5.16

-25.83%

Capgemini Earnings Call Summary

Earnings Call Date: Feb 18, 2025 | % Change Since: -24.17% | Next Earnings Date: Jul 30, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with strong resilience in operating margins and commercial momentum, especially in AI and generative AI, offset by revenue declines and challenges in specific sectors and regions.

Highlights

Resilient Operating Margin

Capgemini maintained its operating margin at 13.3% of revenue, stable year-on-year, despite a revenue decline.

Strong Bookings and Commercial Momentum

The company reported solid bookings totaling €23,821 million, representing a robust book-to-bill ratio of 1.08, indicating strong commercial momentum.

Leadership in AI and Generative AI

Capgemini made significant strides in AI and generative AI, with gen AI bookings accounting for around 5% of Q4 bookings and close to 4% for the full year.

Significant ESG Progress

The company reduced its absolute emissions Scope 1, 2, and 3 by 35% compared to 2019, and the share of renewable energy reached 98%.

Improved Growth in Financial Services

Financial Services recorded a visible improvement in its growth rate, marking its return to growth with a 2% increase at constant currency in Q4.

Lowlights

Revenue Decline

Capgemini's revenues were down 2% year-on-year at constant currency, with an organic growth decline of 2.4% for the full year.

Challenges in Manufacturing Sector

The manufacturing sector experienced strong headwinds, with a growth rate decelerating to -6.1% in Q4.

Noticeable Slowdown in France

France experienced a notable slowdown, with revenues decreasing by 3.5% due to a significant contraction in the manufacturing sector.

Higher Sales and Marketing Expenses

The company saw an increase in selling expenses, impacting the effectiveness of sales investments.

Company Guidance

During the Capgemini 2024 Full Year Results Call, CEO Aiman Ezzat provided guidance for the upcoming fiscal year, highlighting key metrics and anticipated challenges. The company reported revenues of €22,096 million, a 2% decrease year-on-year at constant currency, with a slight improvement in growth rate towards the end of the year, finishing at -1.1% in Q4. Bookings were strong at €23,821 million, reflecting a robust book-to-bill ratio of 1.08. The operating margin was maintained at 13.3% of revenue, showcasing stability despite revenue decline. Organic free cash flow remained solid at €1,961 million. For 2025, Capgemini projected a revenue growth range of -2% to +2% at constant currency, factoring in potential geopolitical and sectorial uncertainties, particularly in manufacturing and Europe. The company aims for a 0 to 20 basis point improvement in operating margin and targets organic free cash flow around €1.9 billion. The strategic focus remains on operational efficiency and growth in high-value services such as cloud, AI, and gen AI, leveraging a trained workforce of 150,000 in gen AI tools.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.