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Capgemini (CGEMY)
OTHER OTC:CGEMY
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Capgemini
(OTC:CGEMY)
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Rating:65Neutral
Price Target:
$27.00
▼(-20.00% Downside)
Action:ReiteratedDate:02/28/26
The score is driven primarily by steady profitability and strong cash generation, reinforced by constructive 2026 guidance and strong bookings. These positives are tempered by clear technical weakness (downtrend signals), along with recent growth softness and increased leverage/restructuring execution risk.
Positive Factors
Free Cash Flow Strength
Capgemini has shown durable cash generation with organic FCF near EUR 1.9–2.0bn and historical conversion roughly 0.88–0.90x of net income. Consistent FCF supports debt service, dividends, buybacks and M&A funding, giving strategic flexibility through cycles.
Strong Bookings and Revenue Visibility
Sustained bookings and a book-to-bill >1 indicate durable commercial traction and backlog that supports forward revenue. Strong bookings increase visibility on medium-term demand and help smooth delivery of revenue even if organic growth is lumpy.
Strategic M&A, Partnerships and AI Traction
M&A (WNS, Cloud4C), hyperscaler partnerships and a >EUR600m AI-led mega deal position Capgemini in higher-growth digital and sovereign offerings. Realized synergies and cross-selling expand addressable market and strengthen long-term competitive positioning.
Negative Factors
Increased Leverage
Re-leveraging from recent M&A raised net debt and financial risk. Higher leverage reduces cushion for downturns, constrains capital allocation flexibility and increases sensitivity to prolonged revenue weakness, elevating refinancing and covenant exposure over the medium term.
Regional Demand Weakness (Continental Europe)
Persistent softness in Continental Europe, notably France, pressures gross margins and bookings. As a material market, prolonged regional underperformance can erode overall margin stability and constrain organic growth, making reliance on M&A for growth riskier long term.
High Restructuring and Integration Execution Risk
Large headcount expansion from acquisitions and a EUR 700m multi-year restructuring plan create execution and cash-out risk. Integration complexity and one-off costs can depress near-term margins and take time to translate into sustainable productivity gains.
Capgemini (CGEMY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$20.58B
Dividend Yield2.33%
Average Volume (3M)8.98K
Price to Earnings (P/E)11.8
Beta (1Y)0.99
Revenue Growth-0.20%
EPS Growth-6.50%
CountryUS
Employees341,118
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)1.66
Shares Outstanding849,643,400
10 Day Avg. Volume0
30 Day Avg. Volume8,976
Financial Highlights & Ratios
PEG Ratio-2.07
Price to Book (P/B)2.06
Price to Sales (P/S)1.11
P/FCF Ratio11.46
Enterprise Value/Market Cap1.20
Enterprise Value/Revenue1.11
Enterprise Value/Gross Profit8.30
Enterprise Value/Ebitda16.06
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)3.02
Revenue Forecast (FY)$28.25B
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 generates revenue primarily through its consulting and professional services, where it charges clients for project-based work and long-term contracts. The company has multiple key revenue streams, including IT services, cloud solutions, and business transformation projects. Additionally, Capgemini benefits from recurring revenue through managed services and maintenance contracts. Significant partnerships with leading technology firms like Microsoft, Salesforce, and SAP further enhance its offerings and market reach, contributing to its overall earnings. The company also engages in strategic acquisitions to expand its capabilities and client base, which plays a vital role in its revenue growth.
Capgemini Earnings Call Summary
Earnings Call Date:Feb 13, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call balanced strong strategic and operational positives—above-guidance revenue growth, robust bookings and book-to-bill, stable operating margin, solid free cash flow, normalized EPS growth, material AI/Intelligent Operations traction (including a >EUR 600m mega deal), and progress on ESG—against notable near-term headwinds: regional softness in Continental Europe (notably France), a 30 bps gross margin decline, higher non-operational one-offs and restructuring costs, and increased net debt/leverage following M&A. Management provided clear 2026 targets and concrete synergy and restructuring plans, while emphasizing execution on AI, Intelligent Operations and Sovereignty. On balance the highlights outweigh the lowlights as the company shows momentum recovery, disciplined financial targets and strategic positioning for AI-led growth.Q4-2025 Updates
Positive Updates
Full-Year Revenue Growth
Revenues of EUR 22.46 billion (EUR 22,465 million) for FY25, up +3.4% at constant currency and +1.7% on a reported basis, finishing above upgraded guidance.
Strong Bookings and Book-to-Bill
Bookings of EUR 24.36 billion for the year, delivering a book-to-bill ratio of 1.08 for FY25 and a strong 1.21 in Q4, indicating sustained commercial traction and a higher number of large deals.
Stable Operating Margin
Operating margin held at 13.3% for FY25 (stable year-on-year and in line with guidance), demonstrating resilience despite cost pressures in Continental Europe.
Robust Organic Free Cash Flow
Organic free cash flow of EUR 1.95 billion (EUR 1,949 million), in line with the around EUR 1.9 billion target and representing a conversion of net profit to organic FCF at 1.2x.
Earnings Per Share Improvement (Normalized EPS)
Normalized EPS of EUR 12.95, up +5.8% year-on-year, supporting shareholder returns.
Dividend and Shareholder Returns
Board to propose a EUR 3.4 per share dividend; FY25 capital allocation included ~EUR 1.1 billion to shareholder returns (EUR 578 million dividends and EUR 542 million buybacks) and a EUR 2 billion buyback program planned/accelerated in 2026.
Q4 Acceleration and Underlying Organic Momentum
Q4 constant currency growth of 10.6% (including ~6.5 points scope from M&A); underlying organic growth in Q4 ~4% demonstrating quarter-on-quarter improvement across regions, businesses and sectors.
Strategic M&A and Ecosystem Strength
Acquisitions of WNS and Cloud4C strengthened scale and capabilities; >2/3 of bookings are associated with top 12 technology partners; announced sovereign and hyperscaler partnerships (Google Cloud, AWS, Microsoft, SAP).
Intelligent Operations Traction and Mega Deal
Intelligent Operations seen as a growth pillar: closed a first mega deal >EUR 600 million based on Agentic AI-led transformation; 100 cross-selling opportunities identified; targeted revenue synergies of EUR 100–140 million and cost synergies of EUR 50–70 million (annual run rate by end-2027).
Sector and Regional Highlights
Financial services (+9.2% at constant currency) and TMT (+7.7%) were the most dynamic sectors in FY25; North America revenues +7.3% constant currency; UK & Ireland +10.5%; Defence sector enjoyed double-digit growth.
ESG and Governance Progress
Reached 100% renewable electricity for operations, net-zero target by 2040, workforce gender balance at 40.5% (up 7 points since 2019), women in leadership 30.5% (up 13 points since 2019), and CyberVadis score 990/1,000.
Clear 2026 Financial Targets
Guidance for 2026: constant currency revenue growth ~6.5%–8.5% (inorganic contribution ~4.5–5 points), operating margin target 13.6%–13.8%, organic free cash flow ~EUR 1.8–1.9 billion (including ~EUR 200 million additional restructuring cash out).
Negative Updates
Regional Weakness in Continental Europe and France
France revenues declined -4.1% for FY25 and remains challenging; Rest of Europe revenues down -0.7% at constant currency; prolonged softness in Continental Europe weighed on gross margin.
Gross Margin Pressure
Gross margin declined by 30 basis points year-on-year to 27.1%, primarily reflecting a prolonged soft market in Continental Europe despite tighter selling and G&A spend (-20 bps and -10 bps respectively).
Net Profit and EPS (Reported) Decline
Group net profit (group share) of EUR 1,601 million, down -4.2% year-on-year; basic EPS EUR 9.46, down -3.7% (driven by higher other operating income/expense items and acquisition-related costs).
Higher Non-Operational Costs and One-Offs
Other operating income and expenses increased to EUR 784 million (including restructuring costs of EUR 205 million and acquisition & integration costs of EUR 97 million), lowering operating profit to EUR 2,199 million (9.8% of revenues) from 10.7% prior year.
Increased Net Debt and Leverage
Net debt at year-end EUR 5.3 billion; net debt-to-EBITDA ratio rose to 1.66x from 0.7x a year earlier (increase driven by M&A activity including WNS and Cloud4C).
Currency Headwinds
Currency had a negative impact of -370 basis points in Q4 and -170 basis points for FY25; currency headwinds expected to continue into Q1 2026 (~-4 points) and to settle at around -1 to -1.5 points for full-year 2026 based on current rates.
Workforce and Restructuring
Headcount rose to 423,400 (up 24% year-on-year and 19% since end-September) largely due to WNS integration; company plans estimated EUR 700 million of restructuring over the next two years (Fit for Growth), with ~EUR 200 million incremental restructuring cash out in 2026.
Operating Margin Variability by Region
Mixed regional margin performance: Rest of Europe margin down -60 bps; France improvement partly driven by one-offs (underlying margin unchanged); UK&I margin remains healthy but below record levels (down 170 bps from 2024).
Short-Term Conservatism and Execution Risks
Management acknowledged market volatility and has taken a cautious posture for early-2026 guidance; large Intelligent Operations deals take time to close and ramp, so near-term guidance does not assume material contribution from pipeline mega deals.
Company Guidance
Capgemini guided Q1 2026 constant‑currency growth of 8.5–9.5% (with ~6.5 points from M&A) and full‑year 2026 constant‑currency revenue growth of around 6.5–8.5% (inorganic contribution ~4.5–5.0 points), targeting an operating margin of 13.6–13.8% and organic free cash flow of about EUR 1.8–1.9bn (including an estimated ~EUR 200m year‑on‑year increase in restructuring cash out); management also announced an estimated EUR 700m of restructuring over the next two years, limited M&A, accelerated share buybacks (following the EUR 2bn program) and confirmed WNS/Cloud4C run‑rate synergies of EUR 100–140m revenue and EUR 50–70m cost by end‑2027. For context, FY25 baselines cited on the call include revenues of EUR 22.465bn (+3.4% cc), bookings EUR 24.36bn (book‑to‑bill 1.08 for the year, 1.21 in Q4), Q4 cc growth 10.6% (scope impact ~6.5 pts, organic ~4%), operating margin 13.3%, normalized EPS EUR 12.95 (+5.8%), organic FCF EUR 1.949bn, net profit EUR 1,601m, basic EPS EUR 9.46, headcount 423,400, net debt EUR 5.3bn (net debt/EBITDA 1.66) and gross margin 27.1% (down 30bps).Capgemini Financial Statement Overview
Summary
Solid and fairly consistent profitability with strong free cash flow generation and good earnings quality, but recent revenue softness and a 2025 re-leveraging increase financial risk. The unusually weaker 2025 gross margin profile also reduces confidence in near-term trajectory.Income Statement
Profitability is solid and fairly consistent: net margin has generally held around ~6%–8% over 2020–2024 with stable operating profitability, and net income remains strong in absolute dollars. Growth is the main soft spot—revenue accelerated earlier (2021–2022) but then turned slightly negative in 2024 and more meaningfully down in 2025, signaling a weaker demand/booking environment or pricing pressure. A notable red flag is 2025 showing a much lower gross margin versus prior years, which—if accurate—would imply a sharp profitability reset and reduces confidence in the latest period quality/trajectory.66
Positive
Balance Sheet
The balance sheet looks workable but has become more leveraged recently. Debt-to-equity improved materially from 2020 levels and was moderate in 2023–2024, but it moved higher again in 2025 alongside a jump in total debt. Equity remains sizable, and returns on equity have been healthy in the mid-teens range across most years, supporting the view that capital is being used effectively. The key weakness is the re-leveraging in 2025, which raises financial risk if revenue softness persists.61
Positive
Cash Flow
Cash generation is a clear strength: free cash flow is consistently strong and tracks earnings well, with free cash flow running at roughly ~0.88–0.90x of net income across the period, indicating good earnings quality. Operating cash flow and free cash flow are both positive every year shown, supporting flexibility for debt service and shareholder returns. The main drawback is momentum—free cash flow growth has been choppy and slightly negative in 2024–2025, which aligns with the recent top-line slowdown.72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 21.58B | 22.10B | 22.52B | 22.00B | 18.16B |
| Gross Profit | 2.87B | 6.05B | 6.05B | 5.83B | 4.79B |
| EBITDA | 2.87B | 3.23B | 3.19B | 3.14B | 2.53B |
| Net Income | 1.54B | 1.67B | 1.66B | 1.55B | 1.16B |
Balance Sheet | |||||
| Total Assets | 29.05B | 25.66B | 24.70B | 25.48B | 24.03B |
| Cash, Cash Equivalents and Short-Term Investments | 3.03B | 3.06B | 3.70B | 4.19B | 3.51B |
| Total Debt | 10.31B | 6.08B | 6.59B | 7.55B | 7.64B |
| Total Liabilities | 17.38B | 13.86B | 14.23B | 15.74B | 15.55B |
| Stockholders Equity | 11.64B | 11.78B | 10.45B | 9.73B | 8.47B |
Cash Flow | |||||
| Free Cash Flow | 2.09B | 2.21B | 2.27B | 2.23B | 2.31B |
| Operating Cash Flow | 2.37B | 2.53B | 2.52B | 2.52B | 2.58B |
| Investing Cash Flow | -3.86B | -1.34B | -383.00M | -659.00M | -678.00M |
| Financing Cash Flow | 1.75B | -2.02B | -2.31B | -1.12B | -1.75B |
Capgemini Technical Analysis
Negative
33.75
Price Trends
30.43
Negative
30.47
Negative
30.87
Negative
Market Momentum
-1.80
Negative
38.33
Neutral
65.93
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 33.75 is above the 20-day moving average (MA) of 26.15, above the 50-day MA of 30.43, and above the 200-day MA of 30.87, indicating a bearish trend. The MACD of -1.80 indicates Negative momentum. The RSI at 38.33 is Neutral, neither overbought nor oversold. The STOCH value of 65.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CGEMY.
Capgemini Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $56.96B | 18.61 | 32.85% | 2.58% | 4.62% | 1.06% | |
73 Outperform | $126.71B | 17.26 | 25.35% | 2.25% | 6.58% | 1.19% | |
68 Neutral | $30.37B | 14.13 | 15.16% | 1.46% | 7.44% | -4.57% | |
68 Neutral | $7.53B | 20.68 | 10.34% | ― | 14.26% | -15.49% | |
66 Neutral | $22.69B | 15.26 | 15.82% | 2.78% | -1.97% | 48.61% | |
65 Neutral | $20.58B | 11.84 | 13.84% | 2.33% | -0.20% | -6.50% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% |
* Technology Sector Average
CGEMY
Capgemini
24.26
-6.36
-20.77%
ACN
Accenture
205.93
-131.47
-38.97%
CTSH
Cognizant
63.50
-18.55
-22.60%
EPAM
Epam Systems
139.16
-59.45
-29.93%
INFY
Infosys
14.19
-5.15
-26.64%
WIT
Wipro
2.16
-0.96
-30.79%
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.