Cgi Inc (GIB)

Price$73.65Cached quoteAs of 2026-09-06 11:03 UTC

AI: Undervalued

Price checkThe shares look cheap enough to outweigh CGI’s slower growth and higher debt.

At the verified NYSE close, CGI trades at about 13.2 times trailing earnings and 8.5 times trailing free cash flow; free cash flow means cash left after running and reinvesting in the business. Those figures are well below roughly 16.5 times earnings at fiscal 2025 and 20.7 times at fiscal 2024. This discount already prices in weak growth. With trailing operating cash flow of C$2.59 billion and backlog at 1.9 times annual revenue, I see enough downside cushion to rate the shares Undervalued, provided margins do not structurally fall.

Big pictureCGI has turned slow sales growth into steadily stronger earnings and cash generation.

From 2019 to 2024, revenue rose from C$12.11 billion to C$14.68 billion, only about 3.9% annually, but diluted earnings per share increased from C$4.55 to C$7.31, about 9.9% annually. Free cash flow exceeded net income in all six years and reached about C$2.10 billion in 2024. Fiscal 2025 revenue then grew 8.4%, while reported net income slipped 2%. Third-quarter 2026 constant-currency revenue grew just 1.3%, but earnings per share excluding restructuring and acquisition costs rose 9.0%, showing durable economics but modest underlying demand.

Business strengthLong contracts and recurring services support cash flow, while buybacks have reduced share count.

CGI gets 55% of revenue from managed technology and business-process services, which are generally steadier than one-off consulting, and 39% from government clients. Backlog is C$31.79 billion, about 1.9 times annual revenue, and trailing bookings exceeded revenue by 8%. The balance sheet is no longer pristine: net debt reached C$3.68 billion, or 26.6% of capital, after acquisitions and buybacks. Still, that is about 1.4 times trailing operating cash flow, with stable investment-grade ratings. In the third quarter, CGI spent C$412.9 million buying back 4.43 million shares, cutting diluted shares 6.9% year over year.

What could change the storyA lasting artificial intelligence pricing squeeze or poor acquisitions could erase today’s valuation discount.

The bear case is specific: second-quarter results missed market revenue expectations, and one major analyst warned that artificial intelligence could reduce pricing or replace some traditional technology-services work. Third-quarter constant-currency growth remained only 1.3%. CGI also had C$9.47 billion of goodwill in 2024—57% of assets—so weak acquisition returns could force write-downs while current net debt is elevated. The bull case wins if bookings above revenue convert into roughly 4% or better underlying growth while margins stay near 16%; then a roughly 13-times earnings multiple looks too low.

AI: News

Third-quarter reboundJuly results showed stronger earnings and cash flow, easing fears after the spring selloff.

On July 29, CGI reported C$4.19 billion of quarterly revenue, up 2.5%, while diluted earnings per share rose 22.5% and operating cash flow reached C$604.5 million. Trailing bookings were 108.1% of revenue and backlog was C$31.79 billion. The NYSE shares finished about 4.3% higher that day. The timing is consistent with a positive earnings response, but the price move cannot be attributed solely to the report.

Second-quarter selloffApril results missed market expectations despite profit growth, sharply resetting investors’ view of near-term demand.

On April 29, CGI reported C$4.16 billion of revenue, up 3.3%, but growth excluding currency effects was only 1.6%. Earnings per share excluding restructuring and acquisition costs rose 7.1%. In U.S. dollars, reported revenue missed analyst estimates, and the shares fell roughly 13% during the session. The selloff reflected concern that weak underlying growth and possible artificial-intelligence pricing pressure could offset CGI’s strong cash generation and buyback-driven earnings growth.

Chief executive changeCGI changed leaders abruptly in May, adding uncertainty while keeping an experienced insider in charge.

On May 12, Tim Hurlebaus became chief executive immediately, replacing François Boulanger, who retired after about a year and a half in the role. Hurlebaus had been chief operating officer for businesses spanning the United States, United Kingdom and Australia, together nearly half of CGI’s revenue. The Canadian-listed shares rose about 2.2% that day, although attribution is uncertain. The change matters because investors are watching how CGI adapts its consulting model and acquisition strategy to artificial-intelligence disruption.

Loading local price history

Revenue

2017

2018

2019

2020

2021

2022

2023

2024

2025

Net income

2017

2018

2019

2020

2021

2022

2023

2024

2025

Free cash flow

2017

2018

2019

2020

2021

2022

2023

2024

2025

Total cash / debt

CashTotal debt

2017

2018

2019

2020

2021

2022

2023

2024

2025

Financial statements

	2025	2024	2023	2022	2021	2020	2019	2018	2017
Revenue	$15.91B	$14.68B	$14.30B	$12.87B	$12.13B	$12.16B	$12.11B	$11.51B	$10.85B
Operating expenses	—	$12.39B	$12.10B	$10.90B	$10.29B	$10.65B	$10.43B	$10.02B	$9.43B
Operating income	$2.61B	$2.42B	$2.31B	$2.09B	—	—	—	—	—
Operating margin	16.41%	16.46%	16.19%	16.25%	—	—	—	—	—
EBITDA	$2.87B	$2.82B	$2.74B	$2.53B	—	—	—	—	—
EBITDA margin	18.01%	19.23%	19.14%	19.65%	—	—	—	—	—
Net income	$1.66B	$1.69B	$1.63B	$1.47B	$1.37B	$1.12B	$1.26B	$1.14B	$1.04B
Net profit margin	10.42%	11.53%	11.41%	11.39%	11.29%	9.19%	10.43%	9.92%	9.55%
Basic EPSper basic share	CA$7.45	CA$7.42	CA$6.97	CA$6.13	CA$5.50	CA$4.27	CA$4.63	CA$4.02	CA$3.48
Diluted EPSper diluted share	CA$7.35	CA$7.31	CA$6.86	CA$6.04	CA$5.41	CA$4.20	CA$4.55	CA$3.95	CA$3.41