CGI Inc.

The business

One of the world's largest independent IT and business consulting firms, ~94,000 employees ('members') across 40+ countries.

Three revenue streams: managed services / outsourcing (recurring, largest and stickiest), systems integration & consulting, and proprietary IP/software solutions.

Roughly balanced between government/public-sector and commercial clients (financial services, telecom, health, manufacturing).

Reports in Canadian dollars; grows via a well-known 'build-and-buy' M&A playbook, integrating targets onto a common operating model.

The moat

Deep, multi-year managed-services contracts and a large backlog (~C$31B order backlog) create high switching costs and recurring revenue.

Proximity operating model and metro-market density give scale plus local client intimacy that pure-offshore rivals lack.

Long track record of acquiring and margin-accreting bolt-ons, a repeatable engine most peers cannot execute as consistently.

Financial snapshot

Most recent reported period : FY2025 (ended Sep 30 2025); cash-flow TTM to Jun 30 2026. Figures reflect the review date — confirm current numbers before acting.

Free cash flow yield & sustainable growth

Free cash flow yield : ≈11.8%TTM free cash flow C$2.48B ÷ market cap C$20.98B ≈ 11.8%.

Operating cash flow +17.7% and FCF +18.7% on a TTM basis — conversion outpaced revenue growth of ~8%.

Asset-light model (capex ~0.7% of revenue) means most operating cash drops to free cash flow.

FCF funds the acquisition pipeline, buybacks, and the young dividend without stretching the balance sheet.

See the full free-cash-flow yield ranking →

Valuation & what to watch

FCF yield ~11.8% on TTM free cash flow versus market cap — rich cash generation for a services compounder.

Trailing P/E ~12.8x and forward ~10.7x sit well below CGI's historical average, partly reflecting a ~29% market-cap decline over the past year.

Analyst average target ~C$121 vs ~C$105 price implies mid-teens upside, but treat targets as opinion, not fact.

Dividend

Initiated a dividend only in late 2024; currently ~C$0.68/share annualized for a slim ~0.7% yield. CGI's real shareholder return is buybacks and reinvestment into M&A, not the payout.

Risks & the bear case

• Large-deal timing and government IT budgets make bookings lumpy; a slow signing quarter can dent growth optics.
• Growth depends on continuous acquisitions — integration missteps or paying up for targets would erode the compounding story.
• FX translation (large US/European book) swings CAD-reported results.
• Generative-AI could compress traditional staff-augmentation and systems-integration billing over time.

Recent developments

FY2025 revenue reached C$15.91B, up 8.4%, with continued bookings and a record backlog around C$31B.

Rolled up several acquisitions across Europe and North America (e.g. BJSS, Novatec, Dakitec, Apside) to add scale and vertical depth.

TTM free cash flow climbed to ~C$2.48B (+18.7%), and the company sustained aggressive share repurchases.

Stock de-rated over the past year (market cap down ~29%), leaving valuation near multi-year lows.

Verdict

CGI screens as a high-quality, cash-generative IT compounder trading at a below-average multiple with a double-digit FCF yield — the market appears to be pricing in AI-disruption and M&A-dependency risk more than a deterioration in current results. The bull case rests on continued disciplined acquisitions and backlog conversion; the bear case is that services demand structurally softens. CoinCompass is a publisher, not an adviser — verify the latest filing and size any position to your own risk tolerance.