tiprankstipranks
Trending News
More News >
CGI (TSE:GIB.A)
TSX:GIB.A

CGI (GIB.A) AI Stock Analysis

Compare
420 Followers

Top Page

TS

CGI

(TSX:GIB.A)

Rating:66Neutral
Price Target:
C$156.00
▲(10.87%Upside)
The overall score is driven by a mix of financial and operational strengths and weaknesses. Strong revenue growth and financial stability are offset by operational inefficiencies and technical bearish indicators. Valuation and positive earnings sentiment support the stock's prospects, but challenges remain.
Positive Factors
Acquisitions
CGI recently announced three acquisitions and cited a robust M&A pipeline targeting both tuck-ins and larger deals.
Financial Performance
CGI reported results that were in line or slightly ahead across all major metrics, reinforcing its reputation as a defensive name.
Growth Outlook
CGI should be able to achieve over 10% annualized EPS growth over the long term, aided by margin improvement and share buybacks.
Negative Factors
Demand Environment
Management suggested the demand environment remains uncertain as clients prioritize managed services initiatives.
Policy Uncertainty
Policy uncertainty from Washington is negatively impacting client demand globally, especially for growth-oriented projects.
Pricing Pressure
There is caution on pricing pressure, particularly in US Federal, due to ongoing headwinds and competitive pressures.

CGI (GIB.A) vs. iShares MSCI Canada ETF (EWC)

CGI Business Overview & Revenue Model

Company DescriptionCGI Inc. (TSX: GIB.A) is a global information technology and business consulting services company headquartered in Montreal, Canada. The company operates across various sectors including government, financial services, healthcare, telecommunications, and utilities. CGI offers a range of services such as systems integration, consulting, outsourcing, and solutions for IT and business processes, enabling clients to achieve operational efficiency and innovative growth.
How the Company Makes MoneyCGI Inc. generates revenue through a diversified portfolio of IT and business consulting services. The company earns money primarily through long-term outsourcing contracts, systems integration, and consulting services. Key revenue streams include managed IT and business process services, which involve taking over a client's IT operations and business processes to improve efficiency and reduce costs. CGI also provides intellectual property-based solutions and ensures recurring revenue through ongoing support and maintenance services. Significant partnerships with technology vendors and strategic acquisitions further contribute to its earnings by expanding service offerings and market reach.

CGI Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q2-2025)
|
% Change Since: -5.20%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlights CGI's strong revenue growth, successful acquisitions, and solid managed services performance. However, challenges remain in Continental Europe, pressure on earnings margins, and ongoing restructuring costs. The overall sentiment is balanced with optimistic growth prospects and notable challenges.
Q2-2025 Updates
Positive Updates
Revenue Growth
CGI delivered $4 billion in revenue, up 7.6% year-over-year or 3.3% excluding foreign exchange impacts, driven by recent business acquisitions.
Strong Book-to-Bill Ratio
Bookings were $4.5 billion for a book-to-bill ratio of 112%, with North America at 124% and Europe at 101%.
Successful Acquisitions
Completed three acquisitions in Q2: BJSS, Novatec, and Momentum Technologies, expanding presence in the UK, Germany, Spain, and Quebec City.
Managed Services Growth
Managed services bookings exceeded $5 billion, up 21% year-over-year, indicating strong demand for cost-saving solutions.
Solid Cash Generation
Generated $438 million in cash from operations, representing 11% of total revenue.
Negative Updates
Continental Europe Softness
Revenue growth in Europe was only 0.7% due to softer market conditions, particularly in manufacturing and telecommunications sectors.
Restructuring Costs
Incurred $44 million in restructuring costs with an additional $137 million expected, impacting approximately 1.5% of CGI employees.
Earnings Margin Pressure
Earnings before income taxes margin was 14.5%, down 90 basis points year-over-year due to restructuring and acquisition-related costs.
IP Revenue Decline
IP revenue represented 21.5% of total revenue, down 90 basis points year-over-year due to dilutive impact of acquisitions.
Company Guidance
In the second quarter of fiscal 2025, CGI reported $4 billion in revenue, marking a 7.6% year-over-year increase, or 3.3% when excluding foreign exchange impacts. The company's adjusted EBIT rose by 5.9% to $666 million, yielding a margin of 16.5%. Earnings before income taxes were $583 million, with a 14.5% margin, while adjusted net earnings reached $481 million, reflecting an 11.9% margin. CGI's book-to-bill ratio was 112%, with North America achieving 124%. The company's backlog stood at $31 billion, equivalent to twice its revenue. Restructuring costs in the quarter amounted to $44 million, with an additional $137 million expected in future quarters, affecting 1.5% of the workforce. Cash from operations was $438 million, or 11% of total revenue, and CGI invested heavily in acquisitions, stock buybacks, and dividends, maintaining a robust return on invested capital of 15.4%.

CGI Financial Statement Overview

Summary
CGI presents a mixed financial picture. The company faces operational inefficiencies with negative gross and EBIT margins, yet maintains profitability due to effective cost controls and strong revenue growth. The balance sheet is robust, characterized by low leverage and high equity, and cash flows are stable, supporting ongoing operations and investments.
Income Statement
45
Neutral
The TTM (Trailing-Twelve-Months) financials reveal a concerning trend with a negative gross profit, leading to substantial operating losses. Despite this, the company maintains a positive net income, indicating effective cost controls or non-operating income benefits. Revenue has shown consistent growth, improving by 3.2% year-over-year in the latest annual report. However, the negative EBIT margin in the TTM period is a significant drawback, highlighting operational inefficiencies.
Balance Sheet
70
Positive
CGI demonstrates a strong balance sheet with a debt-to-equity ratio of 0.43, indicating manageable leverage levels. The equity ratio stands at 54.33%, reflecting a stable capital structure. The return on equity is commendable at approximately 17.14%, showcasing effective use of shareholder funds to generate profits. These metrics suggest financial stability and a solid foundation despite operational challenges.
Cash Flow
78
Positive
The cash flow statements highlight robust free cash flow generation, with a healthy operating cash flow to net income ratio of 1.27. Free cash flow growth remains positive, although it has slightly decreased in the TTM period compared to previous years. This stability in cash flows supports the company's ongoing operations and strategic investments, providing a cushion against operational weaknesses.
BreakdownTTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income Statement
Total Revenue15.14B14.68B14.30B12.87B12.13B12.16B
Gross Profit-20.87B2.42B2.31B2.82B2.72B2.74B
EBITDA3.00B2.89B2.81B2.53B2.45B2.42B
Net Income1.74B1.69B1.63B1.47B1.37B1.12B
Balance Sheet
Total Assets18.72B16.69B15.80B15.18B15.02B15.55B
Cash, Cash Equivalents and Short-Term Investments1.10B1.46B1.67B1.00B1.72B1.73B
Total Debt4.37B3.31B3.74B3.98B4.18B4.46B
Total Liabilities8.55B7.26B7.49B7.90B8.03B8.29B
Stockholders Equity10.17B9.43B8.31B7.27B6.99B7.26B
Cash Flow
Free Cash Flow1.99B2.10B1.81B1.57B1.88B1.70B
Operating Cash Flow2.21B2.20B2.11B1.86B2.12B1.94B
Investing Cash Flow-2.31B-775.38M-561.86M-911.95M-397.55M-572.45M
Financing Cash Flow-190.19M-1.61B-1.19B-1.59B-1.65B94.17M

CGI Technical Analysis

Technical Analysis Sentiment
Negative
Last Price140.70
Price Trends
50DMA
146.64
Negative
100DMA
147.74
Negative
200DMA
153.01
Negative
Market Momentum
MACD
-1.36
Positive
RSI
36.77
Neutral
STOCH
39.63
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 140.7 is below the 20-day moving average (MA) of 145.07, below the 50-day MA of 146.64, and below the 200-day MA of 153.01, indicating a bearish trend. The MACD of -1.36 indicates Positive momentum. The RSI at 36.77 is Neutral, neither overbought nor oversold. The STOCH value of 39.63 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 (56)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
66
Neutral
$232.37M215.890.57%-3.59%
66
Neutral
$31.40B18.3018.44%0.58%4.60%8.67%
TSKNR
58
Neutral
C$104.58M13.71124.21%-52.43%941.71%
56
Neutral
HK$14.03B5.19-5.75%5.41%9.34%-42.23%
TSPVT
50
Neutral
C$31.12M-18.24%-10.76%-19.28%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:GIB.A
CGI
140.70
-1.78
-1.25%
TSE:ALYA
Alithya Group
2.31
0.29
14.36%
TSE:KNR
Kontrol Technologies
2.50
0.00
0.00%
TSE:PVT
Pivotree
1.20
0.00
0.00%

CGI Corporate Events

Business Operations and StrategyFinancial Disclosures
CGI Achieves Strong Q2 Fiscal 2025 Results with Revenue Surpassing $4 Billion
Positive
Apr 30, 2025

CGI reported robust financial results for the second quarter of Fiscal 2025, with revenue surpassing $4 billion, marking a 7.6% increase year-over-year. The company’s strategic execution and financial resilience are evident in its strong bookings of $4.48 billion, reflecting sustained client trust and confidence in CGI’s expertise. Despite a challenging business environment, CGI’s performance underscores its solid market positioning and commitment to supporting clients’ business objectives.

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.Date of analysis: Jun 22, 2025