CGI (TSX:GIB.A): Assessing Valuation After This Year’s Share Price Reset

What is happening with CGI shares right now

CGI (TSX:GIB.A) has slid about 19% this year even as revenue and net income keep growing at mid single digit and high single digit rates, which sets up an interesting valuation reset.

See our latest analysis for CGI.

Despite the drop this year, the recent 1 month share price return of 6.23% and 1 week rebound suggest sentiment may be stabilizing as investors re weigh CGI’s steady fundamentals.

If CGI’s reset has you rethinking your tech exposure, it could be a good moment to scout other high growth tech and AI stocks that might fit your strategy.

With shares down almost 20% this year despite solid mid single digit revenue and high single digit earnings growth, the key question is whether CGI now trades at a genuine discount, or if the market is simply baking in its next leg of expansion.

Most Popular Narrative Narrative: 17.6% Undervalued

With CGI closing at CA$127.78 against a most popular narrative fair value of about CA$155.08, the gap points to sizable upside if forecasts deliver.

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 or legacy transformation projects position CGI for long-term revenue visibility and sustained free cash flow generation.

Read the complete narrative.

Curious what kind of steady growth, margin lift and future earnings multiple are baked into that upside case, and how buybacks quietly amplify it, read on.

Result: Fair Value of $155.08 (UNDERVALUED)

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

However, stretched government budgets and slower integration of recent acquisitions could easily delay the expected margin lift and undermine that upside narrative.

Find out about the key risks to this CGI narrative.

Build Your Own CGI Narrative

If this view does not quite match your own, or you prefer to dig into the numbers yourself, you can craft a custom CGI story in minutes, Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding CGI.

Looking for more investment ideas beyond 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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