Capgemini (CGEMY) AI Stock Analysis

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Capgemini

(OTC:CGEMY)

Rating:68Neutral

Price Target:

$38.00

▲(7.77%Upside)

Capgemini's solid financial performance, particularly its strong balance sheet and cash flow, supports a stable outlook. Technical indicators show bullish momentum, though caution is warranted due to overbought signals. Valuation metrics suggest the stock is fairly priced, while the earnings call highlights both opportunities in AI and ongoing sectoral challenges.

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

Market Cap

$30.38B

Dividend Yield2.12%

Average Volume (3M)127.41K

Price to Earnings (P/E)16.6

Beta (1Y)0.99

Revenue Growth-1.84%

EPS Growth1.21%

CountryUS

Employees341,118

SectorTechnology

Sector Strength84

IndustryInformation Technology Services

Share Statistics

EPS (TTM)1.29

Shares Outstanding856,737,370

10 Day Avg. Volume0

30 Day Avg. Volume127,413

Financial Highlights & Ratios

PEG Ratio0.11

Price to Book (P/B)0.54

Price to Sales (P/S)0.00

P/FCF Ratio2.38

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 provides consulting, digital transformation, technology, and engineering services primarily in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company offers strategy and transformation services, including strategy, technology, data science, and creative design to support various clients within the digital economy. It also provides applications and technology services that helps the clients to develop, modernize, extend, and secure their IT and digital environment using the latest technologies, as well as offers local technology services in cloud, cybersecurity, quality assurance, testing, and new technology fields. In addition, the company offers business process outsourcing and transactional services, as well as installation and maintenance services for its clients' IT infrastructures in data centers or in the cloud. It serves various industries, including consumer goods and retail; energy and utilities; banking, capital markets, and insurance; manufacturing and life sciences; public sector; telecommunications, media, and technology; and services. Capgemini SE has a strategic partnership with CONA Services LLC to develop digital solutions for the consumer products industry and retail customers. The company was founded in 1967 and is headquartered in Paris, France.

How the Company Makes MoneyCapgemini makes money primarily through its service offerings, which are divided into several key areas. The company generates revenue by providing technology and engineering services, which include system integration, application development, and IT infrastructure management. Consulting services contribute to Capgemini's earnings by offering strategic advice and guidance to businesses in digital transformation and operational improvements. Additionally, Capgemini's digital and cloud services, which include cloud migration, cybersecurity, and data analytics, are significant revenue streams. The company also forms strategic partnerships with technology giants like Microsoft, Google, and Amazon to enhance its service offerings and expand its client base, which further contributes to its revenue growth. These diversified revenue streams enable Capgemini to maintain a competitive position in the global IT services market.

Capgemini Earnings Call Summary

Earnings Call Date:Feb 18, 2025

(Q4-2024)

% Change Since: -8.11%|

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.

Q4-2024 Updates

Positive Updates

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.

Negative Updates

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.

Capgemini Financial Statement Overview

Summary

Capgemini presents a solid financial profile with consistent revenue and profit margins. The company has strengthened its equity position while maintaining a balanced leverage. Cash flow generation remains strong, though growth in free cash flow is limited. Overall, Capgemini is well-positioned within the Information Technology Services industry, demonstrating stability and effective financial management.

Income Statement

Positive

Capgemini demonstrates stable profitability with a consistent gross profit margin of around 27% and a net profit margin of approximately 7.5% over the years. The revenue growth has been steady, with a notable increase from 2020 to 2021 by 14.6%, although the growth rate has slowed in recent years. The EBIT and EBITDA margins are strong, reflecting efficient operations.

Balance Sheet

Positive

The company maintains a reasonable debt-to-equity ratio, improving from 1.48 in 2020 to 0.52 in 2024, indicating a stronger equity position. The return on equity has been robust, reaching 14.2% in 2024, showing effective management of shareholder funds. The equity ratio has improved, reflecting a healthy balance sheet despite the industry’s capital intensity.

Cash Flow

Positive

Capgemini's cash flow statements reveal consistent free cash flow generation, with a free cash flow to net income ratio exceeding 100% over the years, indicating strong cash profitability. Operating cash flow to net income ratio also supports efficient cash generation from operations, although free cash flow growth has been minimal, suggesting limited expansion in cash generation.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
22.10B	22.52B	22.00B	18.16B	15.85B
	Gross Profit
6.05B	6.05B	5.83B	4.79B	4.14B
	EBIT
2.36B	2.35B	2.39B	1.84B	1.50B
	EBITDA
3.23B	3.19B	3.14B	2.53B	2.18B
	Net Income Common Stockholders
1.67B	1.66B	1.55B	1.16B	957.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.06B	3.70B	4.19B	3.51B	3.17B
	Total Assets
25.66B	24.70B	25.48B	24.03B	21.95B
	Total Debt
6.08B	6.59B	7.55B	7.64B	9.05B
	Net Debt
3.29B	3.06B	3.75B	4.51B	6.21B
	Total Liabilities
13.86B	14.23B	15.74B	15.55B	15.84B
	Stockholders Equity
11.78B	10.45B	9.73B	8.47B	6.10B
Cash Flow		Free Cash Flow
2.21B	2.27B	2.23B	2.31B	1.46B
	Operating Cash Flow
2.53B	2.52B	2.52B	2.58B	1.66B
	Investing Cash Flow
-1.34B	-383.00M	-659.00M	-678.00M	-1.71B
	Financing Cash Flow
-2.02B	-2.31B	-1.12B	-1.75B	562.00M

Capgemini Technical Analysis

Technical Analysis Sentiment

Positive

Last Price35.26

Price Trends

50DMA

31.47

Positive

100DMA

32.39

Positive

200DMA

34.32

Positive

Market Momentum

MACD

0.76

Negative

RSI

70.20

Negative

STOCH

99.88

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CGEMY, the sentiment is Positive. The current price of 35.26 is above the 20-day moving average (MA) of 33.80, above the 50-day MA of 31.47, and above the 200-day MA of 34.32, indicating a bullish trend. The MACD of 0.76 indicates Negative momentum. The RSI at 70.20 is Negative, neither overbought nor oversold. The STOCH value of 99.88 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CGEMY.

Capgemini Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
INFY	80 Outperform	$77.61B	24.26	29.00%	2.79%	3.85%	-0.38%
ACN	80 Outperform	$200.90B	26.48	27.26%	1.84%	4.10%	9.78%
IT	80 Outperform	$32.52B	25.72	113.19%	―	5.99%	59.74%
CTSH	76 Outperform	$39.95B	17.06	16.61%	1.53%	4.09%	14.05%
CGEMY	68 Neutral	$30.38B	16.60	15.23%	2.12%	-1.84%	1.21%
WIT	67 Neutral	$31.23B	19.99	16.62%	1.04%	-2.83%	106.18%
Sector *	62 Neutral	$11.93B	10.60	-7.51%	3.00%	7.40%	-8.09%

* Technology Sector Average

Performance Comparison

CGEMY

Capgemini

35.38

-4.12

-10.43%

ACN

Accenture

319.22

41.83

15.08%

CTSH

Cognizant

80.65

17.01

26.73%

Gartner

413.59

-19.08

-4.41%

INFY

Infosys

18.61

1.18

6.77%

WIT

Wipro

3.00

0.24

8.70%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.