National Bank Financial analyst Richard Tse likes the latest quarterly results from Canadian IT consulting giant CGI Inc (CGI Inc Stock Quote, Charts, News, Analysts, Financials TSX:GIB.A), with Tse reiterating in a Wednesday report an “Outperform” rating on the stock. Tse said CGI’s business should prove resilient during the currently tough macroeconomic environment.
Montreal-based CGI, a global IT consulting and systems integration company, reported its fourth quarter fiscal 2022 results on Wednesday, featuring quarterly revenue up 8.0 per cent year-over-year to $3.25 billion and adjusted EBIT up 5.7 per cent to $521.7 million, for a margin of 16.1 per cent. Diluted EPS was 1.51 per share, up 8.6 per cent from a year earlier, while bookings for the company were $13.97 billion, up $123.1 million from a year earlier and representing a book-to-bill ratio of 108.5 per cent.
“Looking ahead, the seemingly never-ending digitization race continues to drive demand, particularly as clients navigate an increasingly dynamic environment,” said CGI President and CEO George D. Schindler in a press release. “CGI remains well positioned to partner with clients on a wide range of business and technology objectives through our suite of end-to-end digital services and solutions, as well as participate in market consolidation.”
Tse called the quarter a solid one, where the $3.25 billion topline came out ahead of his estimate at $3.21 billion and the consensus call at $3.20 billion, while adjusted EPS at $1.56 per share was also a bit better than National Bank’s $1.54 per share estimate and the Street’s $1.55 per share.
Tse noted that CGI was able to preserve margins, while on M&A he praised the company’s record of driving value from its acquisitions, with a return on invested capital of 15.7 per cent in fiscal 2022 compared to 14.9 per cent in fiscal 2021.
Along with his “Outperform” rating, Tse reiterated a C$135.00 target price on GIB.A, which at the time of publication represented a projected one-year return of 23.4 per cent.
“Investors following our research will recall GIB.A / GIB has been our top (short-term) idea since the beginning of the year given its combination of growth and defensive attributes. Year to date, GIB.A is down -2.0 per cent versus NASDAQ: -32.7 per cent and S&P Info Tech: -29.0 per cent; while not a positive return, it continues to outperform meaningfully – despite that, it remains a favourite in a volatile backdrop,” Tse wrote.
For the upcoming fiscal 2023 year, Tse is calling for CGI to generate $13,450.7 million in revenue and $2,703.7 million in EBITDA.