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

CGI Group (NYSE:GIB) (TSE:GIB.A) issued its earnings results on Wednesday. The technology company reported $1.66 EPS for the quarter, beating analysts’ consensus estimates of $1.61 by $0.05, Zacks reports. CGI Group had a return on equity of 18.72% and a net margin of 10.26%.The firm had revenue of $2.95 billion for the quarter, compared to the consensus estimate of $2.94 billion. During the same quarter in the previous year, the company posted $2.10 earnings per share. The business’s quarterly revenue was up 2.5% compared to the same quarter last year.

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 traded down $1.22 during trading hours on Thursday, hitting $73.28. 712,475 shares of the company were exchanged, compared to its average volume of 497,235. 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 company has a market cap of $15.50 billion, a PE ratio of 13.23 and a beta of 0.48. The firm’s 50 day moving average is $66.51 and its 200-day moving average is $72.47. CGI Group has a 52 week low of $59.63 and a 52 week high of $98.19.

CGI Group Announces Dividend

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

Wall Street Analyst Weigh In

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

Institutional Investors Weigh In On CGI Group

Several institutional investors and hedge funds have recently added to or reduced their stakes in GIB. Millennium Management LLC grew its stake in CGI Group by 786.2% in the 1st quarter. Millennium Management LLC now owns 81,470 shares of the technology company’s stock valued at $8,141,000 after buying an additional 72,277 shares during the last quarter. Danske Bank A S acquired a new position in CGI Group in the 3rd quarter valued at approximately $768,000. AQR Capital Management LLC acquired a new position in shares of CGI Group in the first quarter valued at $347,000. Jane Street Group LLC raised its stake in shares of CGI Group by 29.4% in the 1st quarter. Jane Street Group LLC now owns 12,858 shares of the technology company’s stock valued at $1,284,000 after buying an additional 2,921 shares in the last quarter. Finally, Entropy Technologies LP bought a new position in CGI Group during the third quarter worth about $236,000. 66.68% of the stock is currently owned by institutional investors and hedge funds.

About CGI Group

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.