CGI Stock: A Heavy-Hitter That Just Jumped 4%

Shares of CGI stock (TSX:GIB.A) rose after seeing stronger results that put the acquisition tech stock back on the top of the heap.

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If you’re looking for growth, the market isn’t stocked full of options these days. However, one company has seen growth rise higher and higher recently. That company is CGI (TSX:GIB.A).

Shares of CGI stock rose higher on strong earnings, but the question is whether more could be on the way. So let’s get into what makes CGI stock so great, and whether there is momentum from previous quarters.

About CGI stock

First, let’s get into more information about CGI stock. CGI is a multinational information technology (IT) and consulting company based in Canada.  Initially, it operated as an IT consulting firm, providing services to local businesses and government agencies. Over the years, CGI experienced significant growth through both organic expansion and strategic acquisitions. 

Acquisitions played a key role in CGI’s growth strategy, allowing it to enter new markets, expand its service offerings, and strengthen its global presence. The company now offers a wide range of IT and business consulting services to clients across various industries, including government, healthcare, banking and finance, telecommunications, utilities, manufacturing, and retail. Its services include IT consulting, systems integration, application development, managed IT services, cybersecurity, and business process outsourcing.

Since coming on the scene in 1976, CGI has developed expertise in specific industries, allowing it to provide tailored solutions to meet the unique challenges and requirements of clients in those sectors. The company has specialized practices in areas such as government, healthcare, financial services, and utilities, among others.

Recent performance

To understand now whether this strategy continues to work, let’s look at how the company has performed over the last few quarters. Then we can paint a better picture of whether the second quarter results were really all that strong.

The fourth quarter was a strong one for CGI stock, with revenue of $3.5 billion and earnings before income taxes of $557.9 million. Net earnings came in at $414.5 million, with diluted earnings per share (EPS) at $1.79.

The first quarter of 2023 was also strong for CGI stock, beating out estimates. The company reported revenue of $3.6 billion, with earnings before income taxes of $527.1 million. Net earnings came in at $389.8 million, with diluted EPS at $1.67. However, as you can see, besides revenue the company saw an overall drop in performance.

By the second quarter, however, things have improved. Revenue rose once more to $3.7 billion, with earnings before income taxes at $577.4 million. Furthermore, net earnings came in at $426.9 million, with diluted EPS of $1.83. What’s more, the company’s backlog continued to increase.

Bottom line

While CGI stock had a hiccough during the first quarter, it seems that the company is back on track. Its status as an acquisition powerhouse with a hand in a diverse range of projects makes it a heavy hitter on the TSX today. So with shares up 4% after earnings, but still down 12% from 52-week highs, now could be a great time to pick up this stock once again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends CGI. The Motley Fool has a disclosure policy.

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