CGI (TSX:GIB.A) - Share price, News & Analysis

Q: What is the Fair Price of GIB.A when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

GIB.A (CA$110.9) is trading below our estimate of [[fair value]] (CA$115.26)

GIB.A fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	1/6
Past Performance	5/6
Financial Health	5/6
Dividends	0/6

GIB.A Stock Overview

Rewards

Trading at 3.8% below our estimate of its fair value

Earnings are forecast to grow 5.89% per year

Earnings have grown 5.7% per year over the past 5 years

Risk Analysis

No risks detected for GIB.A from our risk checks.

CGI Competitors

Converge Technology Solutions

TSX:CTS

CA$1.5b

Nuvei

TSX:NVEI

CA$6.3b

Constellation Software

TSX:CSU

CA$46.1b

Descartes Systems Group

TSX:DSG

CA$7.8b

Price History & Performance

Summary of all time highs, changes and price drops for CGI
Historical stock prices
Current Share Price	CA$110.90
52 Week High	CA$116.88
52 Week Low	CA$95.45
Beta	0.92
1 Month Change	3.07%
3 Month Change	4.72%
1 Year Change	-0.49%
3 Year Change	6.59%
5 Year Change	77.19%
Change since IPO	88,620.00%

Recent News & Updates

Jul 20

We Think CGI (TSE:GIB.A) Can Stay On Top Of Its Debt

The external fund manager backed by Berkshire Hathaway's Charlie Munger, Li Lu, makes no bones about it when he says...

Jul 09

CGI Inc. (TSE:GIB.A) Shares Could Be 20% Below Their Intrinsic Value Estimate

Today we will run through one way of estimating the intrinsic value of CGI Inc. ( TSE:GIB.A ) by estimating the...

Shareholder Returns

	GIB.A	CA IT	CA Market
7D	0.6%	-0.2%	1.5%
1Y	-0.5%	-28.8%	2.1%

Return vs Industry: GIB.A exceeded the Canadian IT industry which returned -27.7% over the past year.

Return vs Market: GIB.A underperformed the Canadian Market which returned 2.1% over the past year.

Price Volatility

Is GIB.A's price volatile compared to industry and market?
GIB.A volatility
GIB.A Average Weekly Movement	2.9%
IT Industry Average Movement	12.3%
Market Average Movement	10.6%
10% most volatile stocks in CA Market	18.9%
10% least volatile stocks in CA Market	4.2%

Stable Share Price: GIB.A is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: GIB.A's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1976	88,500	George Schindler	https://www.cgi.com

CGI Inc., together with its subsidiaries, provides information technology (IT) and business process services in Canada; Western, Southern, Central, and Eastern Europe; Australia; Scandinavia; Finland, Poland, and Baltics; the United States; the United Kingdom; and the Asia Pacific. Its services include the management of IT and business outsourcing, systems integration and consulting, and software solutions selling activities. The company also offers application development, integration and maintenance, testing, portfolio management, and modernization services; business consulting; and a suite of business process services designed to address the needs of specific industries, as well as IT infrastructure services.

CGI Fundamentals Summary

How do CGI's earnings and revenue compare to its market cap?
GIB.A fundamental statistics
Market Cap	CA$25.68b
Earnings (TTM)	CA$1.45b
Revenue (TTM)	CA$12.63b

17.7x

P/E Ratio

2.0x

P/S Ratio

Is GIB.A overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
GIB.A income statement (TTM)
Revenue	CA$12.63b
Cost of Revenue	CA$8.76b
Gross Profit	CA$3.87b
Other Expenses	CA$2.42b
Earnings	CA$1.45b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Nov 09, 2022

Earnings per share (EPS)	6.26
Gross Margin	30.64%
Net Profit Margin	11.48%
Debt/Equity Ratio	45.4%

How did GIB.A perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is GIB.A undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for GIB.A?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for GIB.A. This is calculated by dividing GIB.A's market cap by their current preferred multiple.
What is GIB.A's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$25.68b

GIB.A key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.3x
Enterprise Value/EBITDA	13x
PEG Ratio	3x

Price to Earnings Ratio vs Peers

How does GIB.A's PE Ratio compare to its peers?

GIB.A PE Ratio vs Peers

The above table shows the PE ratio for GIB.A vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	70.1x
CTS Converge Technology Solutions	69.8x	45.8%	CA$1.5b
NVEI Nuvei	65.1x	44.1%	CA$6.3b
CSU Constellation Software	78.6x	27.1%	CA$46.1b
DSG Descartes Systems Group	66.7x	18.1%	CA$7.8b
GIB.A CGI	17.7x	5.9%	CA$25.7b

Price-To-Earnings vs Peers: GIB.A is good value based on its Price-To-Earnings Ratio (17.7x) compared to the peer average (70.1x).

Price to Earnings Ratio vs Industry

How does GIB.A's PE Ratio compare vs other companies in the North American IT Industry?

Price-To-Earnings vs Industry: GIB.A is good value based on its Price-To-Earnings Ratio (17.7x) compared to the Canadian IT industry average (49.5x)

Price to Earnings Ratio vs Fair Ratio

What is GIB.A's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

GIB.A PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	17.7x
Fair PE Ratio	27.5x

Price-To-Earnings vs Fair Ratio: GIB.A is good value based on its Price-To-Earnings Ratio (17.7x) compared to the estimated Fair Price-To-Earnings Ratio (27.5x).

Share Price vs Fair Value

What is the Fair Price of GIB.A when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: GIB.A (CA$110.9) is trading below our estimate of fair value (CA$115.26)

Significantly Below Fair Value: GIB.A is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is CGI forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

5.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: GIB.A's forecast earnings growth (5.9% per year) is above the savings rate (1.6%).

Earnings vs Market: GIB.A's earnings (5.9% per year) are forecast to grow slower than the Canadian market (7.8% per year).

High Growth Earnings: GIB.A's earnings are forecast to grow, but not significantly.

Revenue vs Market: GIB.A's revenue (4.2% per year) is forecast to grow slower than the Canadian market (6.5% per year).

High Growth Revenue: GIB.A's revenue (4.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: GIB.A's Return on Equity is forecast to be low in 3 years time (15.9%).

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Past Performance

How has CGI performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

5.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: GIB.A has high quality earnings.

Growing Profit Margin: GIB.A's current net profit margins (11.5%) are higher than last year (10.6%).

Past Earnings Growth Analysis

Earnings Trend: GIB.A's earnings have grown by 5.7% per year over the past 5 years.

Accelerating Growth: GIB.A's earnings growth over the past year (13.7%) exceeds its 5-year average (5.7% per year).

Earnings vs Industry: GIB.A earnings growth over the past year (13.7%) underperformed the IT industry 20.5%.

Return on Equity

High ROE: GIB.A's Return on Equity (20.8%) is considered high.

Discover strong past performing companies

Financial Health

How is CGI's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: GIB.A's short term assets (CA$4.3B) exceed its short term liabilities (CA$3.8B).

Long Term Liabilities: GIB.A's short term assets (CA$4.3B) exceed its long term liabilities (CA$4.1B).

Debt to Equity History and Analysis

Debt Level: GIB.A's net debt to equity ratio (34.2%) is considered satisfactory.

Reducing Debt: GIB.A's debt to equity ratio has increased from 26.9% to 45.4% over the past 5 years.

Debt Coverage: GIB.A's debt is well covered by operating cash flow (60%).

Interest Coverage: GIB.A's interest payments on its debt are well covered by EBIT (23x coverage).

Balance Sheet

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Dividend

What is CGI current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate GIB.A's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate GIB.A's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if GIB.A's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if GIB.A's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as GIB.A has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

6.8yrs

Average management tenure

CEO

George Schindler (59 yo)

5.83yrs

Tenure

CA$12,844,215

Compensation

Mr. George D. Schindler has been the Chief Executive Officer, President and Director at CGI Inc. since October 1, 2016. Mr. Schindler served as the Chief Operating Officer at CGI Inc. since May 2014 until...

CEO Compensation Analysis

Compensation vs Market: George's total compensation ($USD9.94M) is above average for companies of similar size in the Canadian market ($USD7.35M).

Compensation vs Earnings: George's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: GIB.A's management team is seasoned and experienced (6.8 years average tenure).

Board Members

Experienced Board: GIB.A's board of directors are considered experienced (9.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/17 00:00
End of Day Share Price	2022/08/17 00:00
Earnings	2022/06/30
Annual Earnings	2021/09/30