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CGI Inc. (TSE:GIB.A)
:GIB.A
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CGI
(NYSE:GIB.A)
60Neutral
Positive Factors
Financial Performance
CGI Group has reported a strong fourth quarter performance, setting a promising tone for the year ahead.
Strategic Growth
M&A activity for CGI Group is accelerating, which indicates strong strategic growth opportunities.
Negative Factors
Macroeconomic Impact
Macro uncertainty continues to impact Europe and the manufacturing and retail sectors.
Mixed Financial Results
Shares of CGI (GIB) are trading largely flat following mixed F1Q25 print, with constant currency revs growth modestly below BofAe/Street and adj. EPS in-line.
CGI (GIB.A) vs. S&P 500 (SPY)
Market Cap
C$31.83B
Dividend Yield0.22%
Average Volume (3M)496.70K
Price to Earnings (P/E)18.5
Beta (1Y)0.62
Revenue Growth2.83%
EPS Growth9.02%
CountryCA
Employees90,250
SectorTechnology
Sector Strength51
IndustrySoftware
Share Statistics
EPS (TTM)7.68
Shares Outstanding203,103,870
10 Day Avg. Volume514,692
30 Day Avg. Volume496,699
Financial Highlights & Ratios
PEG Ratio2.05
Price to Book (P/B)N/A
Price to Sales (P/S)2.20
Price to Cash Flow (P/CF)12.80
P/FCF Ratio13.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$179.63Price Target Upside26.76% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
CGI Business Overview & Revenue Model
Company DescriptionCGI Group Inc. (GIB.A) is a leading global information technology and business consulting services firm. The company operates across various sectors, including financial services, government, health, telecommunications, utilities, and manufacturing. CGI specializes in providing end-to-end IT and business consulting services, systems integration, managed IT services, and intellectual property solutions to help clients achieve their business objectives.
How the Company Makes MoneyCGI Group makes money primarily through a diversified revenue model that includes IT services, consulting, and systems integration. The company generates revenue by delivering digital transformation services, managed IT services, and outsourcing solutions, which involve the management of IT and business processes for clients on a long-term basis. CGI also earns income from systems integration projects, where it develops and implements custom software solutions to meet specific client needs. Additionally, CGI benefits from strategic partnerships with technology providers, allowing it to offer a broad range of solutions tailored to industry-specific requirements. The company's earnings are bolstered by its proprietary intellectual property solutions, which offer recurring revenue streams through licensing and subscription-based models.
CGI Financial Statement Overview
Summary
CGI Group shows mixed financial performance. Strong cash flow and a stable balance sheet with improved leverage are positive indicators. However, negative profitability margins are concerning, highlighting challenges in cost management despite revenue growth.Income Statement
The income statement reveals significant challenges with negative gross profit and EBIT margins over the TTM period, indicating possible issues with cost management or revenue recognition. While revenue growth is evident, from $12.87 billion in 2022 to $14.86 billion TTM, the negative profitability margins overshadow the growth trajectory.30
Negative
Balance Sheet
The balance sheet remains relatively stable, with a decreasing debt-to-equity ratio from 0.61 in 2023 to 0.35 TTM, reflecting improved leverage positions. The equity ratio has improved, showing a solid base of stockholders' equity compared to total assets. However, attention is needed on managing liabilities to ensure continued financial health.70
Positive
Cash Flow
Cash flow statements indicate a strong position with free cash flow showing growth and a healthy operating cash flow to net income ratio of 1.31 TTM. This reflects efficient cash management and conversion of income into cash. However, consistent negative investing cash flow suggests high investment activity, which needs monitoring.75
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 14.86B | 14.68B | 14.30B | 12.87B | 12.13B | 12.16B | Gross Profit |
| -20.91B | -21.08B | 2.31B | 2.82B | 2.72B | 2.74B | EBIT |
| -21.52B | -21.08B | 2.34B | 2.09B | 1.94B | 1.86B | EBITDA |
| 2.99B | 2.75B | 2.81B | 2.53B | 2.45B | 2.42B | Net Income Common Stockholders |
| 1.74B | 1.69B | 1.63B | 1.47B | 1.37B | 1.12B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.80B | 1.46B | 1.67B | 1.00B | 1.72B | 1.73B | Total Assets |
| 17.92B | 16.69B | 15.80B | 15.18B | 15.02B | 15.55B | Total Debt |
| 3.40B | 3.31B | 3.74B | 3.98B | 4.18B | 4.46B | Net Debt |
| 1.60B | 1.85B | 2.17B | 3.01B | 2.48B | 2.76B | Total Liabilities |
| 8.07B | 7.26B | 7.49B | 7.90B | 8.03B | 8.29B | Stockholders Equity |
| 9.86B | 9.43B | 8.31B | 7.27B | 6.99B | 7.26B |
| Cash Flow | Free Cash Flow | ||||
| 2.05B | 2.10B | 1.81B | 1.57B | 1.88B | 1.70B | Operating Cash Flow |
| 2.27B | 2.20B | 2.11B | 1.86B | 2.12B | 1.94B | Investing Cash Flow |
| -740.92M | -775.38M | -561.86M | -911.95M | -397.55M | -572.45M | Financing Cash Flow |
| -679.53M | -1.61B | -1.19B | -1.59B | -1.65B | 94.17M |
CGI Technical Analysis
Negative
141.71
Price Trends
159.11
Negative
157.97
Negative
153.16
Negative
Market Momentum
-4.79
Positive
28.34
Positive
26.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:GIB.A, the sentiment is Negative. The current price of 141.71 is below the 20-day moving average (MA) of 150.47, below the 50-day MA of 159.11, and below the 200-day MA of 153.16, indicating a bearish trend. The MACD of -4.79 indicates Positive momentum. The RSI at 28.34 is Positive, neither overbought nor oversold. The STOCH value of 26.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:GIB.A.
CGI Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $12.43B | 64.17 | 10.92% | ― | 15.98% | 21.64% | |
79 Outperform | C$3.47B | 43.05 | 7.09% | ― | 33.74% | 61.09% | |
76 Outperform | $1.46B | 17.21 | 14.76% | 4.14% | 8.11% | 15.83% | |
69 Neutral | $10.00B | 11.21 | 16.00% | 3.88% | -3.59% | 432.46% | |
63 Neutral | C$98.05B | 97.90 | 30.90% | 0.12% | 21.56% | 31.90% | |
60 Neutral | C$31.83B | 18.45 | 19.01% | 0.22% | 2.83% | 9.02% | |
58 Neutral | $21.97B | 10.49 | -18.75% | 2.40% | 4.80% | -25.17% |
* Technology Sector Average
Performance Comparison
TSE:GIB.A
CGI
141.71
-6.85
-4.61%
TSE:ENGH
Enghouse Systems
26.46
-3.14
-10.60%
TSE:DSG
The Descartes Systems Group
145.16
19.96
15.94%
TSE:OTEX
Open Text
37.86
-13.48
-26.26%
TSE:CSU
Constellation Software
4,626.66
889.87
23.81%
TSE:MDA
MDA Ltd
28.38
13.85
95.32%
CGI Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -13.92% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a generally positive sentiment with significant growth in revenue and profitability metrics, strategic acquisitions, and high client satisfaction. However, challenges in the European market and IP revenue decline present notable concerns.Highlights
Revenue and Growth
CGI delivered CAD3.8 billion of revenue, up 5.1% year-over-year or 2.7% when excluding the impact of foreign exchange. Strong growth in U.S. federal (14%), Canada (5.9%), Asia-Pacific (5.2%), and U.K. and Australia (3.2%).
Book-to-Bill Ratio
Bookings were CAD4.2 billion for a book-to-bill ratio of 110%. Both North America and Europe had identical book-to-bill ratios at 110%.
Profitability Metrics
Earnings before income taxes were CAD592 million for a margin of 15.6%, up 100 basis points year-over-year. Adjusted EBIT was CAD612 million, representing a margin of 16.2%.
Net Earnings and EPS
Net earnings were CAD439 million for a margin of 11.6%, up 80 basis points year-over-year. Diluted EPS was CAD1.92, representing an increase of 15% year-over-year.
Cash from Operations
Cash from operations was CAD646 million, representing 17.1% of total revenue, contributing to a 12-month generation of nearly CAD2.3 billion, up nearly CAD200 million compared to last year.
Strategic Acquisitions
Acquisition of Daugherty in the U.S. and newly signed agreement to acquire BJSS in the U.K. to expand footprint in key markets and industries.
Strong Client Satisfaction
Client satisfaction levels rose to 9.5 out of 10, with high intention of clients to engage CGI again in the future.
Lowlights
European Market Challenges
European operations reported a change of minus 0.8% year-over-year due to slower market conditions, particularly in Germany and France, and continued softness in the manufacturing sector.
IP Revenue Decline
IP revenue represented 21.6% of total revenue, down 40 basis points year-over-year, attributed to recent business acquisitions.
Costs and Utilization Issues in Europe
Incurred CAD8 million in costs in Q1 to realign cost structure with market conditions in Germany, with an expectation of another CAD42 million by Q3.
Company Guidance
During CGI's First Quarter Fiscal 2025 Conference Call, the company reported solid financial metrics, indicating strong performance. CGI achieved CAD3.8 billion in revenue, marking a 5.1% year-over-year increase, or 2.7% in constant currency. The company observed robust growth in the U.S. federal segment at 14%, Canada at 5.9%, and Asia-Pacific at 5.2%. The North American operations grew by 6.9%, while European operations faced a slight decline of 0.8%, attributed mainly to slower market conditions in Germany and France. CGI's book-to-bill ratio was 110%, with CAD4.2 billion in bookings, and their global backlog reached CAD29.8 billion, providing revenue visibility for two years. Profitability metrics were strong, with earnings before income taxes at CAD592 million, reflecting a margin increase of 100 basis points to 15.6%. Adjusted EBIT was CAD612 million, representing a margin of 16.2%. Moreover, net earnings improved to CAD439 million for a margin of 11.6%, and diluted EPS saw a significant 15% increase year-over-year. The company also highlighted ongoing strategic moves, including recent acquisitions, and reiterated its commitment to its profitable growth strategy, which includes investments in AI technologies and managed services.CGI Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
CGI Group Announces Leadership Transition: Julie Godin Named Executive Chair
Positive
Jan 29, 2025
CGI Group announced a leadership transition with Julie Godin appointed as Executive Chair of the Board, while founder Serge Godin becomes Co-Chair. This succession is part of CGI’s long-term strategic plan, designed to ensure continued growth and global leadership. Julie Godin, who has been with the company for over 15 years, has played a significant role in shaping its strategic direction. The transition is seen as a crucial step towards CGI’s perpetual growth, with an emphasis on leveraging technology to benefit clients and communities.
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
CGI Group Reports Strong Q1 2025 Financial Results with Strategic Growth Initiatives
Positive
Jan 29, 2025
CGI Group reported a 5.1% increase in revenue for the first quarter of fiscal 2025, reaching $3.79 billion, alongside a significant rise in earnings and cash generation. The company’s strong financial performance, supported by $4.16 billion in bookings and a robust cash flow of $646 million, underscores its effective execution amid a challenging business environment. CGI’s strategic focus on AI and M&A activities has strengthened its position as a trusted advisor, enhancing its ability to deliver value to stakeholders and sustain profitable growth.
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.