CGI Group (NYSE:GIB) Posts Earnings Results, Beats Expectations By $0.05 EPS

Key Points

• CGI Group beat quarterly expectations: EPS came in at $1.66 versus the $1.61 consensus, while revenue reached $2.95 billion, up 2.5% year over year.
• Demand and AI opportunities remain strong. Bookings totaled CAD 17.8 billion with a 108% book-to-bill ratio, and AI-related pipeline opportunities nearly doubled to approximately CAD 10 billion.
• Growth was modest and investor sentiment cautious. Organic growth excluding foreign exchange was 1.3%, shares fell 1.6% after the results, and analysts’ average rating was “Reduce,” with six Holds and one Sell.

CGI Group (NYSE:GIB - Get Free Report) TSE: GIB.A released its earnings results on Wednesday. The technology company reported $1.66 EPS for the quarter, topping analysts' consensus estimates of $1.61 by $0.05, Zacks reports. The business had revenue of $2.95 billion for the quarter, compared to the consensus estimate of $2.94 billion. CGI Group had a net margin of 10.26% and a return on equity of 18.72%. The business's revenue for the quarter was up 2.5% on a year-over-year basis. During the same period in the previous year, the firm earned $2.10 EPS.

Here are the key takeaways from CGI Group's conference call:

• Q3 earnings and cash generation were strong: Revenue rose 2.5% year over year to CAD 4.2 billion, adjusted EPS increased 9% to CAD 2.29, and cash from operations reached CAD 605 million.
• Backlog and demand indicators remain healthy. Trailing-12-month bookings were CAD 17.8 billion with a 108% book-to-bill ratio, while contracted backlog totaled CAD 31.8 billion, or 1.9 times annual revenue.
• AI-related opportunities are expanding. CGI said its overall 12-month pipeline grew more than 10% year over year, with AI-embedded opportunities nearly doubling to approximately CAD 10 billion and managed-services and SI&C pipelines up 20% and more than 30%, respectively.
• Organic growth remained modest at 1.3% excluding foreign exchange, although U.S. Federal performance improved and APAC and European growth benefited from acquisitions and delivery-center demand. Management also acknowledged some delayed decision-making in Europe and expects future tax rates of 26% to 27%.
• CGI plans to continue investing in AI capabilities, acquisitions, and sovereign infrastructure while returning capital through buybacks and dividends; its low leverage and CAD 3.2 billion in available capital resources leave room for larger M&A.

CGI Group Stock Down 1.6%

Shares of GIB stock traded down $1.22 on Thursday, reaching $73.28. 712,475 shares of the company's stock traded hands, compared to its average volume of 497,235. The company has a market capitalization of $15.50 billion, a P/E ratio of 13.23 and a beta of 0.48. CGI Group has a 12-month low of $59.63 and a 12-month high of $98.19. The company has a debt-to-equity ratio of 0.28, a quick ratio of 0.68 and a current ratio of 0.95. The business's 50 day moving average price is $66.51 and its two-hundred day moving average price is $72.47.

CGI Group Dividend Announcement

The firm also recently declared a quarterly dividend, which will be paid on Friday, September 18th. Stockholders of record on Friday, August 14th will be issued a dividend of $0.17 per share. The ex-dividend date is Friday, August 14th. This represents a $0.68 dividend on an annualized basis and a dividend yield of 0.9%. CGI Group's payout ratio is currently 9.03%.

Hedge Funds Weigh In On CGI Group

Several institutional investors and hedge funds have recently bought and sold shares of the business. Strive Financial Group LLC purchased a new stake in shares of CGI Group in the fourth quarter worth approximately $37,000. Danske Bank A S purchased a new position in CGI Group during the third quarter valued at approximately $768,000. Entropy Technologies LP acquired a new position in CGI Group in the 3rd quarter valued at approximately $236,000. EverSource Wealth Advisors LLC increased its stake in CGI Group by 53.3% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 1,452 shares of the technology company's stock valued at $152,000 after buying an additional 505 shares during the period. Finally, Jane Street Group LLC lifted its position in CGI Group by 29.4% in the 1st quarter. Jane Street Group LLC now owns 12,858 shares of the technology company's stock worth $1,284,000 after buying an additional 2,921 shares in the last quarter. Hedge funds and other institutional investors own 66.68% of the company's stock.

Wall Street Analyst Weigh In

GIB has been the topic of several research reports. UBS Group dropped their price target on CGI Group from $79.00 to $70.00 and set a "neutral" rating on the stock in a report on Thursday, April 30th. TD Securities lowered CGI Group from a "buy" rating to a "hold" rating in a research report on Thursday, July 23rd. Royal Bank Of Canada lowered CGI Group from an "outperform" rating to a "sector perform" rating and decreased their price target for the company from $150.00 to $100.00 in a research report on Thursday, April 30th. Finally, Weiss Ratings restated a "sell (d+)" rating on shares of CGI Group in a report on Wednesday, June 24th. Six investment analysts have rated the stock with a Hold rating and one has given a Sell rating to the company's stock. According to MarketBeat.com, CGI Group presently has an average rating of "Reduce" and a consensus price target of $83.67.

CGI Group Company Profile

CGI Group Inc is a global information technology and business consulting firm that delivers a broad range of services including IT consulting, systems integration, application development and maintenance, infrastructure and network services, managed IT and business process outsourcing. The company works with clients to design, build and operate IT systems and business solutions, with capabilities spanning cloud and hybrid IT environments, cybersecurity, data analytics and artificial intelligence, digital transformation and enterprise resource planning implementations.

Founded in 1976 in Quebec by Serge Godin and André Imbeau, CGI has grown from a regional systems integrator into a multinational professional services organization.

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