Is CGI Group Stock A Buy Correct Now?

CGI (CGI Stock Quote, Chart, Data, Analysts, Financials TSXV:GIB.A) reported fiscal Q3 2025 outcomes consistent with expectations, with revenue rising 11.4% year-over-year (7.0% in fastened overseas cash), in response to a July 30 report from Nationwide Monetary establishment Financial Markets analyst Richard Tse. That compares to Tse’s forecast of 10.8% growth and the Street consensus of 9.5%.

Tse estimated pure growth for the quarter was roughly –0.9% in fastened overseas cash when excluding acquisitions made inside the ultimate twelve months. He maintained an “Outperform” rating on the stock with an unchanged objective of C$185.00.

“Complete, we count on the outcomes and outlook proceed to assist our funding thesis,” he said

Montreal-based CGI is Canada’s largest tech company, offering IT consulting, packages integration, and outsourcing suppliers through a group of world provide centres. Its workforce has expanded from 250 in 1982 to about 90,000 in the intervening time.

CGI’s bookings bought right here in light at $4.15-billion this quarter, with a book-to-bill ratio of 1.01x — lower than every ultimate quarter and the equivalent interval ultimate yr. Tse said the drag bought right here largely from the U.S. Federal Authorities enterprise, nonetheless well-known it’s displaying indicators of restoration, rising to 0.86x from 0.40x. Some enterprise bookings had been moreover delayed due to the broader monetary setting.

“We proceed to contemplate capital deployment on acquisitions stays a significant growth driver going into FY26 and in our view, the stock is organising correctly to be taught from that,” he said. “Recall that CGI has deployed ~$2.1+ bln (incl. our estimate for the upcoming Apside acquisition that’s however to close) in capital through FY25 since CEO Francois Boulanger assumed that operate vs. the $390 mln in FY24.

Attempting ahead, Tse said CGI is well-positioned to keep up making acquisitions, with over $2.1 billion in on the market liquidity even after factoring inside the estimated value of buying Apside.

“Notably, Administration pointed to increasingly engaging valuations (in light of macro uncertainties) whereas intimating it has a pipeline of likely motivated sellers,” he said. “And whereas ROIC of 14.6% in FQ3 was down from 16.0% in FY24 and FY23, we see the stock setting as a lot as revenue from scaling ROIC via working leverage (from integration and dealing synergies) beneath elevated acquisition train with a commensurate valuation re-rating for the stock.”

Tse said CGI must do $3.21-billion in Adjusted EBITDA on revenue of $15.99-billion in fiscal 2025. He thinks these numbers will improve to $3.39-billion on revenue of $16.74-billion in fiscal 2026.

CGI’s M&A momentum is highly effective, contributing 7.1% to Q3 revenue, whereas pure growth confirmed indicators of bottoming. The company has deployed over $2.1-billion on presents this yr, far above 2024 ranges, with additional likely given its low leverage and highly effective liquidity. Margins dipped barely as a consequence of integration costs, nonetheless earlier presents have delivered steady ROICs.

Operationally, Q3 cash transfer dipped on assortment delays, whereas adjusted EBIT of $666-million beat expectations. Restructuring in Europe continues, alongside elevated offshoring and automation. CGI expects to spend one different $100-million on these efforts in 2025. Adjusted EPS climbed 10% to $2.10, aided by buybacks.

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