Stock Analysis

CGI Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

  •  Updated
TSX:GIB.A
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It's been a good week for CGI Inc. (TSE:GIB.A) shareholders, because the company has just released its latest first-quarter results, and the shares gained 2.5% to CA$103. The result was positive overall - although revenues of CA$3.0b were in line with what the analysts predicted, CGI surprised by delivering a statutory profit of CA$1.32 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for CGI

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TSX:GIB.A Earnings and Revenue Growth January 29th 2021

Taking into account the latest results, CGI's 14 analysts currently expect revenues in 2021 to be CA$12.4b, approximately in line with the last 12 months. Per-share earnings are expected to grow 14% to CA$5.15. In the lead-up to this report, the analysts had been modelling revenues of CA$12.4b and earnings per share (EPS) of CA$5.12 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of CA$106, suggesting that the company has met expectations in its recent result. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values CGI at CA$120 per share, while the most bearish prices it at CA$73.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await CGI shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that CGI's revenue growth will slow down substantially, with revenues next year expected to grow 1.8%, compared to a historical growth rate of 3.6% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.5% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CGI.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that CGI's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for CGI going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with CGI .

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