Is CGI Group stock a buy right now?

CGI (CGI Stock Quote, Chart, News, Analysts, Financials TSXV:GIB.A) reported fiscal Q3 2025 results in line with expectations, with revenue growing 11.4% year-over-year (7.0% in constant currency), according to a July 30 report from National Bank Financial Markets analyst Richard Tse. That compares to Tse’s forecast of 10.8% growth and the Street consensus of 9.5%.

Tse estimated organic growth for the quarter was approximately –0.9% in constant currency when excluding acquisitions made in the last twelve months. He maintained an “Outperform” rating on the stock with an unchanged target of C$185.00.

“Overall, we think the results and outlook continue to support our investment thesis,” he said

Montreal-based CGI is Canada’s largest tech firm, offering IT consulting, systems integration, and outsourcing services through a network of global delivery centres. Its workforce has expanded from 250 in 1982 to about 90,000 today.

CGI’s bookings came in light at $4.15-billion this quarter, with a book-to-bill ratio of 1.01x — lower than both last quarter and the same period last year. Tse said the drag came mostly from the U.S. Federal Government business, but noted it’s showing signs of recovery, rising to 0.86x from 0.40x. Some enterprise bookings were also delayed due to the broader economic environment.

“We continue to believe capital deployment on acquisitions remains a primary growth driver going into FY26 and in our view, the stock is setting up well to benefit from that,” he said. “Recall that CGI has deployed ~$2.1+ bln (incl. our estimate for the upcoming Apside acquisition that is yet to close) in capital through FY25 since CEO Francois Boulanger assumed that role vs. the $390 mln in FY24.

Looking ahead, Tse said CGI is well-positioned to keep making acquisitions, with over $2.1 billion in available liquidity even after factoring in the estimated cost of buying Apside.

“Notably, Management pointed to increasingly attractive valuations (in light of macro uncertainties) while intimating it has a pipeline of potentially motivated sellers,” he said. “And while ROIC of 14.6% in FQ3 was down from 16.0% in FY24 and FY23, we see the stock setting up to benefit from scaling ROIC via operating leverage (from integration and operating synergies) under increased acquisition activity with a commensurate valuation re-rating for the stock.”

Tse said CGI should do $3.21-billion in Adjusted EBITDA on revenue of $15.99-billion in fiscal 2025. He thinks those numbers will improve to $3.39-billion on revenue of $16.74-billion in fiscal 2026.

CGI’s M&A momentum is strong, contributing 7.1% to Q3 revenue, while organic growth showed signs of bottoming. The company has deployed over $2.1-billion on deals this year, far above 2024 levels, with more likely given its low leverage and strong liquidity. Margins dipped slightly due to integration costs, but past deals have delivered solid ROICs.

Operationally, Q3 cash flow dipped on collection delays, while adjusted EBIT of $666-million beat expectations. Restructuring in Europe continues, alongside increased offshoring and automation. CGI expects to spend another $100-million on these efforts in 2025. Adjusted EPS climbed 10% to $2.10, aided by buybacks.

-30-