Have you been paying attention to shares of CGI Group (
GIB Quick Quote GIB - Free Report) ? Shares have been on the move with the stock up 7% over the past month. The stock hit a new 52-week high of $91.39 in the previous session. CGI Group has gained 14.7% since the start of the year compared to the 11.8% move for the Zacks Computer and Technology sector and the 6.2% return for the Zacks Computer - Services industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 28, 2021, CGI reported EPS of $1.07 versus consensus estimate of $1.03 while it missed the consensus revenue estimate by 16.48%.
For the current fiscal year, CGI is expected to post earnings of $4.4 per share on $9.84 billion in revenues. This represents a 21.21% change in EPS on an 8.8% change in revenues. For the next fiscal year, the company is expected to earn $4.79 per share on $10.19 billion in revenues. This represents a year-over-year change of 8.86% and 3.48%, respectively.
CGI may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
CGI has a Value Score of C. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 16.9X versus its peer group's average of 16.8X. Additionally, the stock has a PEG ratio of 2.46. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, CGI currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if CGI passes the test. Thus, it seems as though CGI shares could have a bit more room to run in the near term.
How Does CGI Stack Up to the Competition?
Shares of CGI have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Forrester Research (
FORR Quick Quote FORR - Free Report) , CACI International ( CACI Quick Quote CACI - Free Report) , and Facebook ( FB Quick Quote FB - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 25% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CGI, even beyond its own solid fundamental situation.