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CGI's (GIB) Earnings and Revenues Surpass Estimates in Q4

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CGI Inc. (GIB - Free Report) reported fourth-quarter fiscal 2020 adjusted earnings of 92 cents per share, which beat Zacks Consensus Estimate by 3.4%. 

Total revenues of $2.196 billion beat the consensus mark by 0.2%.

In domestic currency, the company reported adjusted earnings of C$1.22 per share, compared with C$1.21 reported in the year-ago quarter. Moreover, total revenues decreased 1.1% (4.5% on constant currency) to C$2.93 billion.

Bookings in the fiscal fourth quarter were C$3.5 billion indicating a book-to-bill ratio of 118.8%. Backlog at the end of the fiscal fourth quarter was C$22.7 billion

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

Segment Revenue Details

In the fourth quarter of fiscal 2020, revenues from Western and Southern Europe were C$433.1 million, down 8.9% (down 14.2% on constant currency) on a year-over-year basis. The decline was mainly due to weakness in financial services sector owing to the ongoing coronavirus crisis.

Further, revenues from Canada declined 7.9% (down 8% on constant currency) to C$396.8 million, mainly due to weakness in financial services sector. 

The U.K. and Australia segment reported revenue growth of 2.8% (but down 2.8% on constant currency) year over year to C$347.5 million.

Revenues from Central and Eastern Europe improved 4.7% (down 1.3% on constant currency) year over year to C$306.8 million.

In the fiscal fourth quarter, revenues from Scandinavia segment declined 10.1% (down 16% on constant currency) to C$234.2 million, mainly due to weakness in manufacturing, retail & distribution sector.

Finland, Poland and Baltics reported revenues of C$178.4 million, indicating growth of 1.2% year over year. However, revenues declined 4.8% on constant currency basis, due to reduced volumes in the government sector.

Asia-Pacific reported revenues of C$171.6 million, improving 9.7% (up 13.5% on constant currency) from the year-ago quarter. The improvement came on the back of higher demand for offshore delivery centers, especially from utilities and financial services sectors.

The U.S. Commercial and State Government segment posted revenues of C$461.4 million, up 3.1% (up 2% on constant currency) on a year-over-year basis. The top line benefited from increases in IP sales and service revenues in the financial services sector.

Revenues from the U.S. Federal segment came in at C$431.4 million, increasing 3.5% (up 2.5% on constant currency) on a year-over-year basis. The top line gained from acquisitions along with higher sales of IP solutions and cybersecurity services.

Margins

In the fiscal fourth quarter of 2020, the company reported adjusted EBIT (earnings before interest and tax) of C$457.6 million, unchanged on a year-over-year basis. Adjusted EBIT margin was 15.6% up 10 basis points (bps) on a year-over-year basis.  

Balance Sheet

As of Sep 30, 2020, CGI’s cash and cash equivalents came in at C$1.71 billion compared with C$1.37 billion as of Jun 30, 2020.

The company had C$1.5 billion in its unsecured revolver credit facility as of Sep 30, 2020.

In the fiscal fourth quarter, cash provided by operating activities was C$492 million compared with C$584.8 million generated in the previous quarter.

Fiscal 2020 Results

In fiscal 2020, CGI reported revenues of C$12.2 billion, indicating a marginal increase of 0.4% from fiscal 2019.

Adjusted earnings per share came in at C$4.89 compared with C$4.70 reported in fiscal 2019.

Adjusted EBIT margin expanded 20 bps to 15.3% in fiscal 2020. The company had C$11.9 billion worth of bookings at the end of the year, indicating a book-to-bill ratio of 97.4%. 

In fiscal 2020, CGI repurchased 10.6 million shares worth C$1 billion and spent C$267 million on acquisitions.

Zacks Rank & Stock to Consider

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

Some better-ranked stocks in the broader technology sector are Jabil (JBL - Free Report) , Cadence Design Systems (CDNS - Free Report) and NVIDIA (NVDA - Free Report) . Jabil sports a Zacks Rank #1 (Strong Buy), while Cadence and NVIDIA carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Jabil, Cadence and NVIDIA is currently 12%, 15.4%, and 20.1%, respectively.

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