Is It Time To Consider Buying CGI Inc. (TSE:GIB.A)?

Today we're going to take a look at the well-established CGI Inc. (TSE:GIB.A). The company's stock received a lot of attention from a substantial price movement on the TSX over the last few months, increasing to CA$109 at one point, and dropping to the lows of CA$95.89. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CGI's current trading price of CA$103 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CGI’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for CGI

What's the opportunity in CGI?

Great news for investors – CGI is still trading at a fairly cheap price. According to my valuation, the intrinsic value for the stock is CA$132.14, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, CGI’s share price is theoretically quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

Can we expect growth from CGI?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 13% over the next couple of years, the outlook is positive for CGI. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? Since GIB.A is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on GIB.A for a while, now might be the time to enter the stock. Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy GIB.A. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.

It can be quite valuable to consider what analysts expect for CGI from their most recent forecasts. Luckily, you can check out what analysts are forecasting by clicking here.

If you are no longer interested in CGI, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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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.