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CGI (TSE:GIB.A)
TSX:GIB.A
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CGI
(TSX:GIB.A)
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Rating:70Outperform
Price Target:
C$110.00
▲(11.89% Upside)
Action:ReiteratedDate:02/28/26
The score is driven primarily by strong financial quality (profitability and free cash flow) and a reasonable valuation (P/E ~13.2). These positives are meaningfully offset by weak technicals, with the stock in a clear downtrend below major moving averages and negative momentum readings.
Positive Factors
Strong free cash flow generation
Sustained FCF near $2.26B and ~89% conversion of net income provide durable internal funding for capex, M&A and debt paydown. High FCF supports reinvestment in platforms and client delivery centers, enhancing long-term competitiveness and financial optionality.
Healthy operating profitability
High gross and EBIT margins reflect scale in systems integration, managed services and industry expertise, enabling durable earnings power. Margin levels support investment in talent and offerings, while revenue growth indicates continuing client demand across sectors.
Recurring, contract-driven business model
Long-term managed services and outsourcing contracts create recurring revenue, predictable cash flows and client stickiness. This business mix reduces revenue volatility, supports utilization planning and enables upsell of new services like cloud migrations over multi-year horizons.
Negative Factors
Rising leverage trend
Debt-to-equity rising from ~0.35 to ~0.43 signals a move toward higher financial leverage. While still moderate, the trend reduces flexibility for large strategic investments and raises interest/service obligations, making the company more sensitive to macro or sector stress.
Net margin compression
Net margin decline (from ~11.5% to ~10.4%) and step-down in ROE point to pressure on profitability resilience. Persistent margin compression could reflect competitive pricing, cost inflation or mix shifts toward lower-margin work, eroding long-term return on capital.
Cash efficiency vs. revenue is moderate
Operating cash flow at ~44% of revenue indicates working-capital or timing dynamics reducing cash efficiency. Over time, weaker cash conversion versus revenue can constrain funding for growth or require external financing during investments or downturns, increasing operational risk.
CGI (GIB.A) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$20.89B
Dividend Yield0.48%
Average Volume (3M)566.77K
Price to Earnings (P/E)15.5
Beta (1Y)0.45
Revenue Growth8.43%
EPS Growth0.25%
CountryCA
Employees94,000
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)2.12
Shares Outstanding190,635,130
10 Day Avg. Volume857,925
30 Day Avg. Volume566,774
Financial Highlights & Ratios
PEG Ratio41.71
Price to Book (P/B)2.72
Price to Sales (P/S)1.76
P/FCF Ratio13.21
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$147.41Price Target Upside49.94% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)8.97
Revenue Forecast (FY)C$16.71B
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:Nov 05, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Neutral
CGI reported strong revenue growth and robust bookings, driven by strategic acquisitions and demand for managed services. However, challenges such as the impact of the U.S. federal shutdown, increased DSO, and significant restructuring costs were noted.Q4-2025 Updates
Positive Updates
Strong Revenue Growth
CGI delivered $4 billion of revenue in Q4, up 9.7% year-over-year, or 5.5% when excluding the impact of foreign exchange.
Robust Bookings and Backlog
Bookings in Q4 reached $4.8 billion with a book-to-bill ratio of 119%. The contracted backlog was $31.5 billion, equating to 2x revenue.
Managed Services Demand
Managed services showed strong demand with a 6% growth in constant currency, and a book-to-bill ratio of 120%.
Dividend Increase
CGI's Board approved a 13% increase in the quarterly cash dividend to $0.17 per share.
AI Strategy and Development
CGI emphasized its AI-driven strategy, incorporating AI into its consulting, systems integration, and managed services to drive efficiency and innovation.
Negative Updates
Federal Shutdown Impact
The U.S. federal government shutdown is expected to impact CGI's next quarter revenue by $60 million to $75 million and margin by $15 million to $22 million.
Increased DSO
Days Sales Outstanding (DSO) increased to 45 days compared to 41 days in the prior year, impacted by recent business acquisitions.
Restructuring and Acquisition Costs
Restructuring and acquisition-related costs amounted to $122 million, impacting net earnings.
Company Guidance
During the fourth quarter of fiscal 2025, CGI reported strong financial performance with a revenue of $4 billion, reflecting a 9.7% year-over-year increase, or 5.5% excluding foreign exchange impacts. Growth was significantly driven by the acquisition of BJSS, which boosted the U.K. operations by 28%, and continued demand for APAC delivery centers, which grew by 6.4%. The U.S. segments saw a combined growth of 5.7%, mainly due to mergers with Aeyon and Daugherty. The bookings for the quarter reached nearly $4.8 billion, leading to a book-to-bill ratio of 119%, with notable contributions from the U.S. Federal segment at 185%. The company's contracted backlog stood at $31.5 billion, approximately twice the revenue. CGI's adjusted EBIT was $667 million, marking an 11.2% year-over-year increase and yielding a margin of 16.6%. Adjusted net earnings rose to $472 million, resulting in a diluted EPS of $2.13, up by 11%. The company also generated $663 million from operations, representing 16.5% of total revenue, and allocated significant capital across various areas, including $81 million in business investments and $491 million in stock buybacks.CGI Financial Statement Overview
Summary
Strong profitability and earnings power (TTM EBIT margin ~15.6%, net margin ~10.4%) alongside robust free cash flow generation (~$2.26B) and solid FCF conversion (~89% of net income). Offsetting factors are mild margin compression versus 2024 and a gradual increase in leverage (debt-to-equity rising to ~0.43) with ROE stepping down (~16%).Income Statement
TTM (Trailing-Twelve-Months) revenue is $16.2B with strong profitability (about 20.7% gross margin and 10.4% net margin). Earnings power looks solid with an EBIT margin around 15.6%, and revenue has grown meaningfully versus prior periods. The main offset is some pressure in net margin versus 2024 (net margin down from ~11.5% to ~10.4%), suggesting profitability is not expanding despite higher sales.84
Very Positive
Balance Sheet
Leverage appears manageable with debt at ~$4.8B versus equity of ~$10.0B (debt-to-equity ~0.43 in TTM), and returns remain healthy (return on equity ~16% in TTM). Balance sheet scale is strong (assets ~$18.9B), but leverage has trended higher versus 2024 (debt-to-equity was ~0.35), and return on equity has stepped down from prior peaks (~18–20%), indicating modest deterioration in balance-sheet efficiency.78
Positive
Cash Flow
Cash generation is strong: TTM operating cash flow is ~$2.46B and free cash flow is ~$2.26B, with free cash flow up sharply (TTM growth ~13.1%). Free cash flow conversion is solid (free cash flow is ~89% of net income), supporting quality of earnings. A key weakness is that cash flow relative to revenue is moderate (operating cash flow is ~44% of revenue per the provided coverage figure), suggesting cash generation is not as efficient as the income statement profitability might imply.82
Very Positive
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 16.21B | 15.91B | 14.68B | 14.30B | 12.87B | 12.13B |
| Gross Profit | 3.33B | 3.29B | 3.01B | 2.88B | 2.60B | 2.50B |
| EBITDA | 3.01B | 2.52B | 2.61B | 2.51B | 2.28B | 2.14B |
| Net Income | 1.66B | 1.66B | 1.69B | 1.63B | 1.47B | 1.37B |
Balance Sheet | ||||||
| Total Assets | 18.91B | 19.52B | 16.69B | 15.80B | 15.18B | 15.02B |
| Cash, Cash Equivalents and Short-Term Investments | 841.10M | 867.88M | 1.46B | 1.58B | 972.64M | 1.70B |
| Total Debt | 4.81B | 4.47B | 3.32B | 3.74B | 3.98B | 4.22B |
| Total Liabilities | 8.97B | 9.24B | 7.26B | 7.49B | 7.90B | 8.03B |
| Stockholders Equity | 9.95B | 10.28B | 9.43B | 8.31B | 7.27B | 6.99B |
Cash Flow | ||||||
| Free Cash Flow | 2.26B | 2.12B | 2.10B | 1.81B | 1.57B | 1.88B |
| Operating Cash Flow | 2.46B | 2.23B | 2.20B | 2.11B | 1.86B | 2.12B |
| Investing Cash Flow | -2.29B | -2.20B | -775.38M | -561.86M | -911.95M | -397.55M |
| Financing Cash Flow | -1.31B | -246.66M | -1.61B | -1.19B | -1.59B | -1.65B |
CGI Technical Analysis
Negative
98.31
Price Trends
112.18
Negative
117.96
Negative
126.39
Negative
Market Momentum
-3.17
Negative
35.00
Neutral
23.55
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 98.31 is below the 20-day moving average (MA) of 100.07, below the 50-day MA of 112.18, and below the 200-day MA of 126.39, indicating a bearish trend. The MACD of -3.17 indicates Negative momentum. The RSI at 35.00 is Neutral, neither overbought nor oversold. The STOCH value of 23.55 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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Sector (61)
TSE:GIB.A
CGI
98.31
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Alithya Group
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TSE:PVT
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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.