Foreign exchange rates drive CGI’s gains

Article Excerpt

CGI GROUP INC. $10 (Toronto symbol GIB.A; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 308.6 million; Market cap: $3.1 billion; Price-to-sales ratio: 0.8; SI Rating: Extra Risk) sells computer systems and specialized software that help businesses automate routine transactions. This allows CGI’s clients, which include Bank of Montreal and AT&T, to focus on their main operations. Many of its customers sign long-term contracts. This gives CGI strong recurring revenue. In its second fiscal quarter, which ended March 31, 2009, CGI’s revenue rose 1.9%, to $948.3 million from $930.8 million a year earlier. The United States accounts for over 40% of CGI’s revenue, so it benefits from a falling Canadian dollar: A 7.5% gain from currency-exchange rates helped offset a 5.6% drop in contract revenue. Earnings rose 10.4%, to $76.3 million from $69.1 million. Earnings per share rose 19.1%, to $0.25 from $0.21, on fewer shares outstanding. CGI’s $12-billion order backlog is equal to 3.2 times its annual revenue. CGI Group is…