CGI Inc. (TSE:GIB.A) saw a double-digit share price rise of over 10% in the past couple of months on the TSX. The recent jump in the share price has meant that the company is trading around its 52-week high. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today we will analyse the most recent data on CGI’s outlook and valuation to see if the opportunity still exists.
See our latest analysis for CGI
Is CGI Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 20% below our intrinsic value, which means if you buy CGI today, you’d be paying a fair price for it. And if you believe the company’s true value is CA$182.22, then there’s not much of an upside to gain from mispricing. What's more, CGI’s share price may be more stable over time (relative to the market), as indicated by 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. CGI's earnings over the next few years are expected to increase by 23%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? GIB.A’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on GIB.A, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
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.
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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.
About TSX:GIB.A
Flawless balance sheet with proven track record.
