Analysts are forecasting a target price of $46.56 for this IT outsourcing company’s stock.
CGI Group (GIB)
from Internet Wealth Builder
CGI Group (GIB) shares moved higher following the mid-November release of strong fourth quarter and 2014 fiscal year end results (to Sept. 30). Although revenue for the quarter was only up by 1% to just under $2.5 billion, net earnings showed a big jump to $213.7 million ($0.67 per share, fully diluted) compared to $141 million ($0.44 per share) in the same period last year.
Part of the improved result can be attributed to the 2012 acquisition of Britain’s Logica plc for $2.7 billion in a bid to expand CGI’s international footprint. Logica’s U.K. and European operations generated enhanced income for CGI because of the lower value of the Canadian dollar.
Some analysts questioned the wisdom of the deal at the time but CGI’s CEO Michael Roach says the integration process is now complete and has produced annual cost synergies of more than $400 million.
“Since closing the acquisition, CGI earnings per share have grown by more than 85%,” he said. “We remain focused on achieving further accretion by realizing incremental cost and revenue synergies. In summary, we begin fiscal 2015 in an excellent position strategically, operationally and financially.”
For the full fiscal year, Montreal-based CGI reported revenue of $10.5 billion, up from $10.1 billion in fiscal 2013. Net earnings almost doubled to $859.4 million ($2.69 per share) from $455.8 million ($1.44 per share) last year. The company has an order backlog of $18.2 billion.
CGI is the fifth largest independent information technology and business process services firm in the world. It employs about 68,000 professionals in offices and delivery centers across the Americas, Europe, and the Asia Pacific region. The company offers a range of services including high-end business and IT consulting, systems integration, application development and maintenance, infrastructure management, as well as many proprietary solutions.
Gordon Pape and Tom Slee, The Internet Wealth Builder, www.buildingwealth.ca, 1-888-287-8229, December 1, 2014