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

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CGI Group (GIB - Free Report) 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-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 - Free Report) 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 - Free Report) 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 - Free Report) 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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