CGI’s Backlog Growth Fueled By Enterprise Cloud Modernization

CGI offers defensive growth backed by exceptional forward revenue visibility. Its $31.8 billion contracted backlog represents nearly two years of annual revenue, shielding the business from discretionary corporate IT budget pauses. Because mission-critical public sector and financial institutions form the bedrock of its client roster, the resulting cash flows are counter-cyclical and exceptionally resilient. Furthermore, the company has positioned itself as an enterprise integrator for commercial generative AI and sovereign cloud infrastructures.

The stock trades at just 12.1 times CGI’s forward earnings forecast. That represents an attractive multiple for a company with such strong growth prospects.

CGI (Toronto symbol GIB.A) is a Montreal-headquartered global provider of end-to-end information technology and business process consulting services. It delivers systems integration, intellectual property solutions, and managed services to public- and private-sector organizations across more than forty countries.

The company’s core operational engine relies on high-touch consulting and managed IT contracts that generate dependable recurring revenue, supported by proprietary intellectual property business solutions. As Canada’s largest provider of computer outsourcing services, the firm 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, the company recently acquired Callibity. Based in Cincinnati, Ohio, this firm provides technology-consulting services to clients in the financial services, insurance and manufacturing industries. CGI has not yet said how much it paid for this business.
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CGI’s contract wins continue to spur results

In its fiscal 2026 third quarter, ended June 30, 2026, Canada’s largest provider of computer outsourcing services saw its revenue rise 2.5%, to $4.19 billion from $4.09 billion a year earlier. That beat the $4.18 billion consensus forecast. If you factor out the benefit from currency rates, CGI’s revenue rose 1.3% in the quarter.

Excluding costs to integrate recent acquisitions and other unusual items, overall earnings in the quarter rose 1.7%, to $478.3 million from $470.1 million. Due to fewer shares outstanding, earnings per share improved 9.0%, to $2.29 from $2.10. That also beat the $2.28 consensus estimate.

CGI continues to win new contracts, particularly from the U.S. federal government following the shutdown. It signed $4.20 billion in new contracts during the quarter. Its book-to-bill ratio in the past 12 months is also a solid 108.1% (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 $31.79 billion, or 1.93 times its revenue in the 12 months ended June 30, 2026. That cuts your risk.

Thanks to contract wins like this, CGI’s earnings in 2027 are forecast at $9.77 a share. The stock trades at an attractive 12.1 times that forecast. The $0.68 dividend yields 0.6%.

Recommendation in The Successful Investor: CGI Inc. remains a buy for aggressive investors.

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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.

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