CGI Group Inc.GIB

Morningstar Rating

Stock Research and Analysis

by Swami Shanmugasundaram

CGI Group, Canada's largest IT services firm, has built a niche for itself in the local market because of its long operating history, but it is a relatively unknown entity in the United States and European markets. The firm has capitalized on strong Read more

Bulls Say

CGI's pipeline remains strong with its backlog, an indicator of future revenue strength, standing at $10.9 billion at the end of fiscal 2009.

CGI boasts a blue-chip client roster of Canadian firms. As the largest independent IT services firm in Canada, CGI is well-positioned to win more business as Canadian firms increase their IT outsourcing budgets.

CGI's healthy balance sheet gives it the flexibility to use acquisitions to expand its service offerings and plug gaps in its portfolio of offerings. Read more

Bears Say

Forty-five percent of CGI's revenue depends on clients' discretionary spending, and a sluggish macroeconomic environment could curtail this revenue source.

CGI generates about 40% of its revenue through its international operations, exposing the firm to considerable foreign exchange rate risk, even with hedging.

CGI has relied on acquisitions in the past to expand its service offerings. There's a chance it may pay too much for future acquisitions. Read more

Strategy

CGI is focusing on a full-service offering strategy, cross-selling additional products to existing customers in order to maximize revenue opportunities. This involves educating existing customers about Read more

Management

Serge Godin, executive chairman of the board, founded CGI in 1976 in a basement with Andre Imbeau. Imbeau serves as executive vice chairman and corporate secretary. Together, they own 96% of the company's Class B shares, which carry 10 votes to the Read more

Profile

Founded in 1976 and headquartered in Montreal, CGI Group is a leading Canadian IT and business process outsourcing (BPO) services firm. The company provides IT and BPO services Read more

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