# CGI (GIB.A) Sector: IT services & consulting | Field | Value | |---|---| | Price | CA$106.42 | | Fair value (Analysts) | CA$126.00 | | Discount to fair value | 15.5% | | Fair value uncertainty (Analysts) | Medium | | Economic moat (Analysts) | Narrow | | LSEG analyst rating (1 strong buy to 5 strong sell) | 2.64 | | Data as of | 2026-10-16 | | Next earnings | 2026-10-29 (estimate) | ## In short The market fears that AI will lower demand for CGI's IT services and prices it for slow growth, and faster organic growth from its backlog with steady margins can close the gap over four to six quarters. ## Themes and gap - Themes: AI disruption risk (ai-disruption), New management (management-change) - Gap type: Can close (closable) - Why: The Q4 fiscal 2026 report and the next quarters show whether government awards in the backlog turn into faster organic growth. ## About CGI is a Canadian IT services and consulting company based in Montreal. It sells consulting, systems integration, managed IT and business process services, and its own software, to governments, banks, insurers, manufacturers, retailers, utilities and health care organizations. About 94,000 consultants and professionals worked for CGI at June 30, 2026. It works in North America, Europe and Asia Pacific, and the United States, the United Kingdom and Australia together give nearly half of its revenue. Many of its contracts are long-term managed services contracts, and its backlog was $31.79 billion, or 1.9 times annual revenue, at June 30, 2026. Revenue was $4.19 billion in Q3 fiscal 2026. Its fiscal year ends on September 30, and it reports in Canadian dollars. ## Thesis The market prices CGI for slow growth and for the fear that AI tools will lower the amount of IT services work that clients buy. Revenue grew only 1.3% in constant currency in Q3 fiscal 2026, down from 7.0% a year earlier. Investors fear that AI can do part of the coding, testing and support work that IT services firms sell by the hour or by the project. CGI also has a new CEO, Tim Hurlebaus, since May 12, 2026. CGI's results are steady: adjusted diluted EPS rose 9.0% in Q3 fiscal 2026, the trailing book-to-bill ratio was 108.1%, and cash from operations was 15.8% of revenue over 12 months. For the gap to close, three things must be true. Organic revenue growth must rise from the low single digits, as the large government awards in the backlog turn into revenue. The adjusted EBIT margin must stay near 16%, which shows that AI does not force price cuts. CGI must keep buying back shares and making accretive acquisitions with its strong cash flow. The Q4 fiscal 2026 report, expected in late October or early November 2026, and the next quarters give the evidence. If growth picks up, the gap can close over the next four to six quarters. The main reason it may not close is a lasting fall in demand for traditional IT services because of AI. ## Checkpoints - Oct 29, 2026 (estimate): Q4 fiscal 2026 results: growth and bookings. Status: Pending. Watch: Constant currency revenue growth above 1.3%, an adjusted EBIT margin near 16% and a book-to-bill ratio above 100% pass; falling revenue or a lower margin fails. - Jan 2027 (estimate): Q1 fiscal 2027: first full year under the new CEO. Status: Pending. Watch: Organic growth that rises as government awards turn into revenue, with steady margins, passes; another quarter of growth near zero fails. ## Balance sheet - Cash: CA$661M - Debt: CA$4.3B - Net debt: CA$3.7B - Undrawn credit line: CA$2.5B - Debt due within 12 months: CA$852M CGI has low debt for its cash flow. At June 30, 2026, long-term debt and lease liabilities, including current portions, were $4.34 billion. Cash and cash equivalents were $625.6 million, and with short-term and long-term investments the total was $661.2 million. Net debt was $3.68 billion, and the net debt to capitalization ratio was 26.6%. The current portion included US senior notes of $852.4 million due in September 2026, which made working capital negative by $349.0 million. CGI had $2,496.4 million available under its $2.5 billion unsecured committed revolving credit facility, which has tranches due in 2029 and 2031. Cash from operations was $2.59 billion over the 12 months to June 30, 2026. In Q3 fiscal 2026, CGI spent $412.9 million on buybacks, $49.6 million on acquisitions and $35.7 million on dividends. The quarterly dividend is $0.17 per share. All figures are in Canadian dollars. As of 2026-06-30. Sources: - https://www.sec.gov/Archives/edgar/data/1061574/000106157426000017/cgi-fy26_q3xpressrelease.htm - https://www.sec.gov/Archives/edgar/data/1061574/000106157426000017/cgi-fy26_q3xmda.htm - https://www.sec.gov/Archives/edgar/data/1061574/000119312526218148/d152309dex991.htm ## Recent events - 2026-07-29: CGI reported Q3 fiscal 2026 results. Revenue rose 2.5% to $4.19 billion, or 1.3% in constant currency. Diluted EPS rose 22.5% to $2.23, and adjusted diluted EPS rose 9.0% to $2.29. The adjusted EBIT margin was 16.3%. Bookings were $4.20 billion, and the trailing book-to-bill ratio was 108.1%. CGI bought back 4,427,600 shares for $412.9 million. - 2026-05-12: The board appointed Tim Hurlebaus as President and CEO. He was President and COO, responsible for the operations in the United States, the United Kingdom and Australia. He succeeds François Boulanger, who is retiring after 30 years at CGI. - 2026-04-28: CGI increased its unsecured committed revolving credit facility to $2.5 billion, with a $1.0 billion tranche due in 2029 and a $1.5 billion tranche due in 2031. ## Risks - High: AI tools can automate part of software development, testing and IT support. Clients can buy less work from IT services firms, or they can ask for lower prices. - Medium: Organic growth is slow. Revenue grew 1.3% in constant currency in Q3 fiscal 2026. If clients delay or cut projects, growth can stay low. - Medium: Government clients give a large part of revenue and bookings. Budget cuts or changes in procurement in the United States, Canada or Europe can delay or reduce contracts. - Low: CGI grows partly by buying other IT services firms. A poor acquisition or a failed integration can lower margins. ## Links - Page: https://picks.kamadorueda.com/company/GIB.A/ - History of changes: https://picks.kamadorueda.com/company/GIB.A/history/ - JSON with full history: https://picks.kamadorueda.com/data/company/GIB.A.json > Picks is a personal record of stock picks. It gives information only, not financial, investment, tax or legal advice. Prices, fair values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.