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CGI Group (GIB) Q3 Earnings Beat Estimates, Revenues Up Y/Y

·3-min read

CGI Group GIB reported third-quarter 2022 non-GAAP earnings of $1.21 per share, which beat the Zacks Consensus Estimate by 2.54% and improved 9% year over year.

Revenues of $2.55 billion beat the consensus mark by 0.25%. At constant currency (cc), the top line increased by11.5%.

The growth in revenues was led by the following segments: Asia Pacific, up 23.3%; Western and Southern Europe, up 23.2%; Canada, up 18.2%; and U.S. commercial and state government, up 13.6%.

Top Line Details

Managed IT and Business Process Services accounted for 54% of revenues. Growth in CGI Group’s revenues was supported by growing demand among customers to decrease operating expenses. Nearly 60% of CGI Group’s clients are looking to reduce operating expenses due to rising inflation. Consequently, demand for managed services increased by 13%, which contributed to CGI’s third-quarter revenues.

Business, consulting, strategic IT consulting and systems integration services accounted for 46% of revenues. Rising demand for CGI Group’s offerings was evident from the company’s rising partnership base.

In the third quarter, CGI Group completed two partnerships — first with IGM Financial in Canada for a mutual fund transfer agency platform; and second with a global bank in France for a solution to streamline retail banking end-to-end processes. This benefited the company’s top-line growth in the quarter under review.

CGI Group, Inc. Price, Consensus and EPS Surprise

CGI Group, Inc. Price, Consensus and EPS Surprise
CGI Group, Inc. Price, Consensus and EPS Surprise

CGI Group, Inc. price-consensus-eps-surprise-chart | CGI Group, Inc. Quote

Operating Details

CGI Group reported adjusted EBIT of $519.9 million, which was up 9.0% year over year. Adjusted EBIT margin improved by 20 basis points year over year to 16.0%.

In the third quarter, bookings were $3.41 billion, which represented a book-to-bill ratio of 104.7%. As of Jun 30, 2022, CGI Group’s backlog stood at $23.24 billion.

Balance Sheet and Cash Flow

CGI Group had cash and cash equivalent and short-term investments of $784.1 million, compared with $1.06 billion as of Mar 31, 2022.

As of Jun 31, 2022, CGI Group had total debt of $3.6 billion, compared with $3.52 million as of Mar 31, 2022.

It generated $419.2 million in cash from operations compared with $472.6 million in the previous quarter.

Zacks Rank & Stocks to Consider

CGI Group currently carries a Zacks Rank #3 (Hold).

CGI Group’s shares have fallen 3.4% compared with the Zacks Computer and Technologysector’s decline of 25.4% in the year-to-date period.

Here are some better-ranked stocks worth considering in the broader sector.

Axcelis Technologies ACLS sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ACLS’ shares have fallen 10.1% in the year-to-date period compared with the Zacks Electronics - Manufacturing Machinery industry’s decline of 29.8%. ACLS is scheduled to report second-quarter 2022 results on Aug 3.

Aspen Technology AZPN carries a Zacks Rank #2 (Buy).

Aspen’s shares have returned 22.3% in the year-to-date period against the Zacks Internet - Software industry’s decline of 52.6%. AZPN is scheduled to report second-quarter 2022 results on Aug 8.

Arrow Electronics ARW carries a Zacks Rank #2.

ARW’s shares have fallen 8.3% in the year-to-date period compared with the Zacks Electronics - Parts Distribution industry’s decline of 7.5%. Arrow is scheduled to report second-quarter 2022 results on Aug 4.


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