CGI Inc: Strong Results Fuel Continued Global Growth in the Tech Services Sector

CGI Inc.’s strategic positioning as a trusted advisor for digital transformation and AI implementation continues to drive strong financial results and client engagement. The company’s disciplined execution and focus on high-value services have delivered consistent revenue growth and margin expansion even as some client industries navigate a challenging business environment.

The acceleration of strategic acquisitions is also effectively expanding client relationships and capabilities in multiple geographies.

The stock trades at 17.6 times the company’s forward earnings forecast.

CGI INC. (Toronto symbol GIB.A; www.cgi.com) is Canada’s largest provider of computer-outsourcing services. CGI helps clients automate routine functions such as accounting and buying supplies. That makes companies more efficient and lets them focus on their main businesses.

CGI fuels its growth with a “Build and Buy” strategy.

The “Build” part refers to the expansion of its current client relationships and the development of new ones. The “Buy” part involves making acquisitions.

Under the Buy part of that strategy, CGI recently acquired four smaller businesses for a total of $1.70 billion.

Thanks to those new operations like these and new contract wins, CGI’s revenue in its fiscal 2025 second quarter, ended March 31, 2025, rose 7.6%, to $4.02 billion from $3.74 billion a year earlier. Even so, that missed the consensus forecast of $4.03 billion. If you factor out the benefit from currency rates, revenue rose 3.3% in the quarter.

CGI is now restructuring its European operations. Severance and other payments totaled $39.5 million in the latest quarter. The company expects to pay an additional $137.0 million to complete the plan.

[ofie_ad]

If you exclude restructuring costs and other unusual items, overall earnings in the quarter rose 4.6%, to $480.7 million from $459.4 million. Due to fewer shares outstanding, earnings per share improved 7.6%, to $2.12 from $1.97. That also fell short of the consensus estimate of $2.13.

CGI signed $4.49 billion in new contracts during the quarter. Its book-to-bill ratio in the past 12 months is also a very healthy 110.6% (a figure below 100% implies demand for its services is falling).

As well, the company’s contract backlog at the end of the quarter was $30.99 billion, or 2.05 times its annual revenue. That cuts your risk.

CGI Inc: European presence expands through strategic acquisitions

CGI has been actively pursuing that “Build and Buy” growth strategy in Europe through several strategic acquisitions in early 2025.

In March 2025, the company completed the acquisition of Novatec, a leading digital services company in Germany and Spain that offers a range of business and IT consulting services, including cloud-based solutions and digital strategies. This acquisition strengthens CGI’s European presence in key commercial sectors including automotive, manufacturing, and financial services.

Another recent acquisition is Apside for an undisclosed amount. Based in France with additional offices in Canada, Portugal, Belgium, Morocco and Switzerland, this firm provides information technology services to over 300 clients, mainly in the manufacturing, financial services, insurance and public sectors.

For all of fiscal 2025, CGI will probably earn $8.33 a share, and the stock trades at a reasonable 17.6 times that estimate. The $0.60 dividend yields 0.4%.

Recommendation in The Successful Investor: CGI Inc. is a buy.

Copy
Link copied
Email
Print

dividend acquisition

Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

Find 5 Safe Stocks to
Buy & Hold for Long-Term
Growth and Steady Income

No Credit Card Required

SEND ME THIS FREE REPORT

Testimonials

The cornerstones of Pat’s strategy–value, diversification and timelines–make his newsletter, The Successful Investor, highly profitable while minimizing risk. His advice is no-nonsense, down-to-earth and based on solid research. You’ll know what to invest in and what to avoid.

Chuck Chakrapani, PhD
Investors Association of Canada
The older I get the better dividends look. For retirees and would-be retirees who want to sleep at night, I can’t think of a better source of information on reliable growing dividend income than Pat McKeough’s newsletter, Dividend Advisor.

Jonathan Chevreau
Financial Post Columnist
As a manager of more than $500 million in mutual funds, I have access to the best brokerage research available in this country. But I still take time to read Pat McKeough’s premium newsletters

John Sartz
I appreciate the 25 years of above market returns I received by following your advice. at least 95% of my investment decisions were based on TSI recommendations.

Chuck J.
Subscriber since 1996. Inner Circle Member Since 2006
The newsletters I receive in Inner Circle Pro are fantastic! I have been following Pat’s advice for years and everything he has said has been amazing. His commentaries are brilliant, insightful, educational, rational and balanced. My returns are almost double the TSE and I have referred many of my friends who have switched over to your services.

Walter H.
Inner Circle Pro subscriber

Free Reports

5 Best Stocks to Buy This Month

The Successful Investor Approach to AI Investing

7 Winning Strategies for Dividend Investors

The Best Blue Chips for Canadian Investors

The ETF Investor’s Handbook

The Canadian Guide on How to Invest in Stocks Successfully

Power and Profits of Energy Stocks

Juniors to Giants: The Complete Guide to Mining Stocks

How to Find the Best Growth Stocks

7 Pro Secrets to Value Investing

Browse Topics

Blue Chip Stocks

Blue chip stocks are big, well-established, dividend-paying corporations with strong business prospects. These are companies that also have sound management that should be able to make the right moves to keep competing successfully in a changing marketplace.

Dividend Stocks

Dividend stocks make cash payouts that serve as a way for companies to share the wealth they’ve accumulated. These payouts are drawn from earnings and cash flow and paid to the shareholders of the company. Typically, these dividends are paid quarterly, although they may be paid annually or even monthly as well.

Value Stocks

What are value stocks?

One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to its sales, earnings or assets), then hold on to them as mainstream investors recognize the value and push up the share price.

Growth Stocks

Growth stocks are companies that are likely to have sales and earnings growth well above market average. Frequently they pay few, if any, dividends. Instead they typically reinvest any extra cash flow to promote further growth. Chosen wisely—according to Pat McKeough’s advice—high-quality growth-oriented stocks can be worthwhile additions to most well-diversified portfolios.

ETFs

What are ETFs?

ETF is an acronym for exchange traded fund.. These exchange traded funds are used to track indexes as closely as possible, since investors cannot actually buy an index outright.

How To Invest

Pat McKeough has been making investing for beginners simple—and profitable—by helping investors make big gains for more than 25 years. His advice to beginning investors is the same as it is for all investors: buy high-quality, mostly dividend paying stocks (or ETFs that hold these stocks) and evenly spread your investments over the five main economic sectors (Resources, Manufacturing, Finance, Utilities and Consumer). Pat also believes investors should avoid stocks in the broker/media limelight and focus on those with hidden or little-noticed assets.

Wealth Management

Wealth management is the practice of putting your savings to work so that it continues to grow over your lifetime and will also benefit your heirs. Wealth management encompasses many different areas of investing like long term investment planning and retirement planning.

AI Investing

Artificial intelligence (AI) is essentially the merging of today’s big computing with big data. This has resulted in breakthroughs in everything from creating machines to recognize faces with more accuracy than a human, to the development of chatbots able to collect, organize and simplify all the Internet has to say on any topic.

Spinoffs

One of the ways a company can try to unlock its own hidden value is by creating a separate company out of a corporate subsidiary. The parent company can either sell stock in the new company to the public, or spin it off—hand the stock out to its own investors.

Penny Stocks

A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.

Mining Stocks

Mining stocks are investments in companies that produce or explore for minerals. Some of these minerals include uranium, coal, molybdenum (which is used in steelmaking), copper, silver and gold. They are affected by fluctuating commodity prices in addition to their own business and operating risks.

Energy Stocks

What are energy stocks?

Businesses that work in the extraction, refining and delivery of energy sources such as natural gas, oil, uranium and coal, are considered energy stocks.