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CGI (TSE:GIB.A)
TSX:GIB.A
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CGI
(TSX:GIB.A)
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Rating:71Outperform
Price Target:
C$136.00
▲(10.62% Upside)
CGI's overall stock score reflects strong financial performance and positive earnings call highlights, particularly in revenue growth and strategic acquisitions. However, bearish technical indicators and concerns over cash flow decline weigh on the score. The valuation is fair, but not compelling enough to offset these concerns.
Positive Factors
Revenue Growth
Strong revenue growth indicates CGI's effective market expansion and acquisition strategy, enhancing its competitive position and long-term profitability.
Geographic and Sectoral Growth
Geographic and sectoral growth, particularly in key markets, underscores CGI's ability to diversify and capitalize on regional opportunities, supporting sustainable expansion.
AI and Innovation Focus
Emphasizing AI and innovation positions CGI at the forefront of digital transformation, enhancing its service offerings and long-term market relevance.
Negative Factors
Decline in Free Cash Flow Growth
A significant decline in free cash flow growth may constrain CGI's ability to invest in growth opportunities and manage debt, impacting financial flexibility.
Margin Impact from Mergers
Margin compression from mergers could affect profitability, requiring effective integration strategies to realize synergies and maintain operational efficiency.
Challenges in U.S. Federal Sector
Challenges in the U.S. federal sector may hinder growth in a key market, necessitating strategic adjustments to mitigate impact and capture future opportunities.
CGI (GIB.A) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$26.98B
Dividend Yield0.49%
Average Volume (3M)495.75K
Price to Earnings (P/E)16.0
Beta (1Y)0.65
Revenue Growth7.13%
EPS Growth5.02%
CountryCA
Employees94,000
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)2.10
Shares Outstanding198,795,360
10 Day Avg. Volume459,129
30 Day Avg. Volume495,749
Financial Highlights & Ratios
PEG Ratio3.25
Price to Book (P/B)3.76
Price to Sales (P/S)2.42
P/FCF Ratio16.94
Enterprise Value/Market Cap1.30
Enterprise Value/Revenue2.26
Enterprise Value/Gross Profit11.23
Enterprise Value/Ebitda11.58
Forecast
1Y Price Target
$151.93Price Target Upside23.58% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
CGI Business Overview & Revenue Model
Company DescriptionCGI Inc., together with its subsidiaries, provides information technology (IT) and business process services in Canada; Western, Southern, Central, and Eastern Europe; Australia; Scandinavia; Finland, Poland, and Baltics; the United States; the United Kingdom; and the Asia Pacific. Its services include the management of IT and business outsourcing, systems integration and consulting, and software solutions selling activities. The company also offers application development, integration and maintenance, testing, portfolio management, and modernization services; business consulting; and a suite of business process services designed to address the needs of specific industries, as well as IT infrastructure services. It serves clients operating in government, banking and capital market, health, utility, communication and media, oil and gas, retail, consumer and services, space, manufacturing, insurance, life sciences, retail and consumer service, and transportation and logistics sectors. The company was formerly known as CGI Group Inc. and changed its name to CGI Inc. in January 2019. CGI Inc. was founded in 1976 and is headquartered in Montreal, Canada.
How the Company Makes MoneyCGI generates revenue primarily through its consulting and IT services, which include project-based and recurring revenue models. The company earns money by providing tailored solutions to clients, often through multi-year contracts that ensure a steady income stream. Key revenue streams include systems integration projects, application management services, and outsourcing services. Additionally, CGI benefits from strategic partnerships with technology leaders that enhance its service offerings and market reach. The company also has a significant presence in the public sector, which provides a consistent source of revenue through government contracts. Overall, CGI's revenue model is supported by its diversified client base and the growing demand for digital transformation services across industries.
CGI Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth driven by acquisitions and sectoral momentum, with positive developments in geographic and sectoral growth, robust book-to-bill ratios, and cash generation. However, the impact of mergers on margins, restructuring costs, softness in certain European markets, and challenges in the U.S. federal sector were notable lowlights.Q3-2025 Updates
Positive Updates
Strong Revenue Growth
CGI delivered $4.1 billion of revenue, up 11.4% year-over-year, or 7% excluding foreign exchange impacts, driven by recent acquisitions and momentum in the financial services sector.
Geographic and Sectoral Growth
Strong growth in the U.K. and Australia at 37%, and a combined growth of 9% across U.S. segments. Financial services and government sectors led with 9.6% and 8.7% growth, respectively.
Robust Book-to-Bill Ratio
Bookings were over $4 billion for a book-to-bill ratio of 101%, led by U.S. commercial and state government at 121%.
Adjusted EBIT and EPS Growth
Adjusted EBIT was $666 million, up 10.5% year-over-year. Adjusted net earnings were $470 million, up $30 million, with diluted EPS increasing by 10% to $2.10.
Strong Cash Generation and Investments
Generated $487 million in cash from operations, with investments of $105 million into the business, including Gen AI.
Negative Updates
Margin Impact from Mergers
Adjusted EBIT margin was 16.3%, down 10 basis points due to the impact of recent mergers in the process of integration.
Restructuring and Acquisition Costs
Restructuring and acquisition-related costs were $84 million, impacting net earnings and EPS.
Softness in Continental Europe
Continued softness in Continental Europe, particularly in the MRD sector, partially offset growth.
Challenges in U.S. Federal Sector
U.S. federal operations experienced lower procurement volumes and contract values, impacting segment performance.
Company Guidance
During CGI's third quarter fiscal 2025 conference call, the company reported a robust financial performance with revenue reaching $4.1 billion, marking an 11.4% year-over-year increase, or 7% excluding foreign exchange impacts. The growth was driven by business acquisitions and momentum in the financial services sector, with particularly strong performance in the U.K. and Australia, which saw a 37% growth due to the full integration of BJSS. The book-to-bill ratio stood at 101%, supported by U.S. commercial and state government sectors, and the global backlog hit $30.6 billion, equivalent to twice the revenue. Adjusted EBIT was reported at $666 million with a margin of 16.3%, and adjusted net earnings increased by $30 million year-over-year to $470 million, equating to a margin of 11.5%. CGI also highlighted a strong focus on AI and generative AI, with 40% of its IP revenue now AI-driven, and announced the launch of CGI SpeedOps, a platform aimed at optimizing business processes. The company projected ongoing investments in both organic growth and acquisitions, maintaining a strong capital position with $2.7 billion in readily available resources.CGI Financial Statement Overview
Summary
CGI shows a mixed financial picture with strong revenue growth and a solid balance sheet, but operational inefficiencies are evident with negative gross and EBIT margins. Cash flow remains robust, supporting ongoing operations and investments.Income Statement
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.72
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 15.56B | 14.68B | 14.30B | 12.87B | 12.13B | 12.16B |
| Gross Profit | 3.13B | 3.01B | 2.88B | 2.60B | 2.50B | 2.48B |
| EBITDA | 3.04B | 2.61B | 2.51B | 2.28B | 2.14B | 2.10B |
| Net Income | 1.71B | 1.69B | 1.63B | 1.47B | 1.37B | 1.12B |
Balance Sheet | ||||||
| Total Assets | 19.19B | 16.69B | 15.80B | 15.18B | 15.02B | 15.55B |
| Cash, Cash Equivalents and Short-Term Investments | 1.13B | 1.46B | 1.58B | 972.64M | 1.70B | 1.71B |
| Total Debt | 4.37B | 3.32B | 3.74B | 3.98B | 4.22B | 4.52B |
| Total Liabilities | 8.98B | 7.26B | 7.49B | 7.90B | 8.03B | 8.29B |
| Stockholders Equity | 10.21B | 9.43B | 8.31B | 7.27B | 6.99B | 7.26B |
Cash Flow | ||||||
| Free Cash Flow | 1.97B | 2.10B | 1.81B | 1.57B | 1.88B | 1.70B |
| Operating Cash Flow | 2.20B | 2.20B | 2.11B | 1.86B | 2.12B | 1.94B |
| Investing Cash Flow | -2.44B | -775.38M | -561.86M | -911.95M | -397.55M | -572.45M |
| Financing Cash Flow | 400.63M | -1.61B | -1.19B | -1.59B | -1.65B | 94.17M |
CGI Technical Analysis
Negative
122.94
Price Trends
127.74
Negative
133.77
Negative
142.83
Negative
Market Momentum
-1.48
Negative
42.95
Neutral
45.45
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 122.94 is below the 20-day moving average (MA) of 124.31, below the 50-day MA of 127.74, and below the 200-day MA of 142.83, indicating a bearish trend. The MACD of -1.48 indicates Negative momentum. The RSI at 42.95 is Neutral, neither overbought nor oversold. The STOCH value of 45.45 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
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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.