Yahoo Finance CGI Group, Inc. (GIB) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of CGI Group (GIB)? Shares have been on the move with the stock up 1.2% over the past month. The stock hit a new 52-week high of $106.62 in the previous session. CGI Group has gained 23.6% since the start of the year compared to the 41.4% move for the Zacks Computer and Technology sector and the 20.1% return for the Zacks Computer - Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 26, 2023, CGI reported EPS of $1.35 versus consensus estimate of $1.27.
For the current fiscal year, CGI is expected to post earnings of $5.25 per share on $10.63 billion in revenues. This represents a 9.38% change in EPS on a 5.47% change in revenues. For the next fiscal year, the company is expected to earn $5.77 per share on $11.15 billion in revenues. This represents a year-over-year change of 9.97% and 4.87%, respectively.
Valuation Metrics
CGI may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
CGI has a Value Score of B. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.5X. On a trailing cash flow basis, the stock currently trades at 16.5X versus its peer group's average of 10.7X. Additionally, the stock has a PEG ratio of 2.16. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, CGI currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if CGI meets the list of requirements. Thus, it seems as though CGI shares could still be poised for more gains ahead.
How Does GIB Stack Up to the Competition?
Shares of GIB have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is CACI International, Inc. (CACI). CACI has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of A.
Earnings were strong last quarter. CACI International, Inc. beat our consensus estimate by 6.03%, and for the current fiscal year, CACI is expected to post earnings of $19.99 per share on revenue of $6.72 billion.
Shares of CACI International, Inc. have gained 8% over the past month, and currently trade at a forward P/E of 17.45X and a P/CF of 14.62X.
The Computer - Services industry may rank in the bottom 65% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for GIB and CACI, even beyond their own solid fundamental situation.
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