Cgi Inc (NYSE: GIB)

Sector: Technology Industry: Information Technology Services CIK: 0001061574
Market Cap 16.15 Bn
P/B 2.22
P/E 13.32
P/S 1.37
ROIC (Qtr) 16.57
Div Yield % 0.44
Rev 1y % (Qtr) 13.25
Total Debt (Qtr) 3.13 Bn
Debt/Equity (Qtr) 0.43
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About

Investment thesis

Bull case

  • Strong operating cash flow of 1.80B provides robust 0.57x coverage of total debt 3.13B, indicating excellent debt servicing capability and financial flexibility.
  • Operating cash flow of 1.80B provides exceptional 23.17x coverage of interest expenses 77.49M, showing strong debt service capability.
  • Operating cash flow of 1.80B provides strong 39.38x coverage of stock compensation 45.60M, indicating sustainable incentive practices.
  • Robust free cash flow of 1.60B exceeds capital expenditure of 199.01M by 8.02x, indicating strong organic growth funding capability.
  • Tangible assets of 4.65B provide exceptional 9.97x coverage of deferred revenue 466.58M, showing strong service capability backing.

Bear case

  • Operating cash flow of 1.80B barely covers its investment activities of (1.67B), with a coverage ratio of -1.08, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.80B provides thin coverage of dividend payments of (100.67M) with a -17.83 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 610.49M provide limited coverage of acquisition spending of (1.40B), which is -0.44x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • High financing cash flow of (956.38M) relative to working capital of (214.42M), which is 4.46x suggests concerning dependence on external funding for operational needs.
  • Tangible assets of 4.65B provide limited backing for working capital of (214.42M), which is -21.70x, suggesting increased operational risk in market downturns.

Peer comparison

Companies in the Information Technology Services
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 IBM International Business Machines Corp 229.77 Bn 29.79 2.98 66.57 Bn
2 ACN Accenture plc 136.96 Bn 17.99 1.94 8.20 Bn
3 INFY Infosys Ltd 61.29 Bn 19.41 3.18 0.68 Bn
4 CTSH Cognizant Technology Solutions Corp 31.81 Bn 14.26 1.51 1.15 Bn
5 FIS Fidelity National Information Services, Inc. 28.54 Bn -1.17 2.90 13.00 Bn
6 WIT Wipro Ltd 23.98 Bn 16.25 2.37 2.35 Bn
7 LDOS Leidos Holdings, Inc. 20.68 Bn 14.28 1.20 5.24 Bn
8 BR Broadridge Financial Solutions, Inc. 20.38 Bn 19.09 2.84 3.17 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.91 1.23
EV to Cash from Ops. EV/CFO 6.96 3.12
EV to Debt EV to Debt 3.99 3.45
EV to EBIT EV/EBIT 7.27 -4.05
EV to EBITDA EV/EBITDA 5.75 3.57
EV to Free Cash Flow [EV/FCF] EV/FCF 7.83 -2.69
EV to Market Cap EV to Market Cap 0.77 1.54
EV to Revenue EV/Rev 1.06 47.25
Price to Book Value [P/B] P/B 2.22 3.04
Price to Earnings [P/E] P/E 13.32 4.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 8.79 -0.59
Dividend Payout Ratio % Div Payout % (Qtr) 5.80 14.14
Dividend per Basic Share Div per Share (Qtr) 0.32 0.47
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 3.24 4.61
Interest Coverage Int. cover (Qtr) 22.20 -318.37
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -12.79 -256.13
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -51.19 128.67
Dividend Growth (1y) % Dividend Growth (1y) % 114.67 6.73
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 3.82 -36.77
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 6.95 -22.62
EBIT Growth (1y) % EBIT 1y % (Qtr) 3.94 -87.06
EBT Growth (1y) % EBT 1y % (Qtr) 0.41 75.53
EPS Growth (1y) % EPS 1y % (Qtr) 3.33 122.99
FCF Growth (1y) % FCF 1y % (Qtr) 13.79 -8,761.26
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 14.64 -4.36
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.63 0.79
Cash Payout Ratio Cash Payout (Qtr) 0.05 0.00
Cash Ratio Cash Ratio (Qtr) 0.17 0.73
Current Ratio Curr Ratio (Qtr) 0.94 2.20
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 0.98
Interest Cover Ratio Int Coverage (Qtr) 22.20 -318.37
Times Interest Earned Times Interest Earned (Qtr) 22.20 -318.37
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 18.40 -369.53
EBIT Margin % EBIT Margin % (Qtr) 19.92 -585.52
EBT Margin % EBT Margin % (Qtr) 13.89 -637.04
Gross Margin % Gross Margin % (Qtr) 100.00 24.60
Net Profit Margin % Net Margin % (Qtr) 10.30 -639.67