CGI (TSX:GIB.A): A Fresh Look at Valuation After Recent Share Price Decline

CGI (TSX:GIB.A) shares have been navigating a challenging period, with the stock declining nearly 23% so far this year. Investors are watching closely as the company approaches the next quarter and are looking for signs of renewed momentum.

See our latest analysis for CGI.

Momentum has clearly faded for CGI shares, with a 22.7% year-to-date share price decline and the total shareholder return over the past year down 21.5%. While there is still a three-year total return of just over 13%, investors seem to be waiting for a fresh narrative or visible turnaround before enthusiasm returns.

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The key question is whether the latest pullback signals an undervalued entry point, or if the current share price reflects all known risks and opportunities. This could mean there is little upside for investors seeking future growth.

Most Popular Narrative: 27% Undervalued

With CGI's fair value set by the prevailing narrative at CA$166.83, the last close at CA$121.78 stands out as a significant gap. This sets the backdrop for an in-depth look at what is fueling such a bullish valuation.

“The company's robust $30.6 billion backlog, increasing book-to-bill ratios in higher growth segments (especially IP and managed services), and active pipeline of large digital modernization/legacy transformation projects position CGI for long-term revenue visibility and sustained free cash flow generation.”

Read the complete narrative.

Curious what powers this valuation? The real story is not just backlog size. There are ambitious underlying projections and bold profitability assumptions. Want to know which surprising benchmarks this narrative expects CGI to hit? Dive in to uncover the forecasts shaping this call.

Result: Fair Value of $166.83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing integration challenges from recent acquisitions and delays in large client projects could limit CGI’s margin recovery and slow the projected revenue growth.

Find out about the key risks to this CGI narrative.

Build Your Own CGI Narrative

If you see things differently or want to explore the numbers on your own terms, you can shape your own perspective in just a few minutes. Do it your way

A good starting point is our analysis highlighting 5 key rewards investors are optimistic about regarding CGI.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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