The CGI Inc. (TSE:GIB.A) Second-Quarter Results Are Out And Analysts Have Published New Forecasts

CGI Inc. (TSE:GIB.A) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a credible result overall, with revenues of CA$3.7b and statutory earnings per share of CA$1.83 both in line with analyst estimates, showing that CGI is executing in line with expectations. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for CGI

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Taking into account the latest results, CGI's 14 analysts currently expect revenues in 2024 to be CA$14.7b, approximately in line with the last 12 months. Per-share earnings are expected to accumulate 2.1% to CA$7.37. In the lead-up to this report, the analysts had been modelling revenues of CA$14.8b and earnings per share (EPS) of CA$7.45 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

There were no changes to revenue or earnings estimates or the price target of CA$157, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on CGI, with the most bullish analyst valuing it at CA$175 and the most bearish at CA$127 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that CGI's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.9% growth on an annualised basis. This is compared to a historical growth rate of 4.0% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 9.3% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CGI.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at CA$157, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple CGI analysts - going out to 2026, and you can see them free on our platform here.

You can also view our analysis of CGI's balance sheet, and whether we think CGI is carrying too much debt, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.