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CGI (TSX:GIB.A) Could Be 14% Undervalued After Earnings And Buyback

Simply Wall St · 2d ago

CGI (TSX:GIB.A) is back in focus after reporting third quarter fiscal 2026 earnings on 29 July, alongside a completed share buyback tranche and a new public sector contract in Munich.

See our latest analysis for CGI.

Those earnings, the completed CA$412.9 million buyback and the new Munich contract come against a backdrop of a 7 day share price return of 14.26% and a 30 day share price return of 12.00%. The year to date share price return is down 18.01% and the 1 year total shareholder return is down 22.66%, which points to improving short term momentum against weaker longer term results.

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Bulls will point to CGI's solid earnings, buyback and Munich win. Bears will point to the weak multi year shareholder returns. Which side does the current valuation actually lean toward?

Most Popular Narrative: 14.3% Undervalued

CGI's most followed narrative puts fair value at about CA$119.85, above the last close of CA$102.67. This frames the current discount through a long term earnings lens.

The company's robust $30.6 billion backlog, increasing book-to-bill ratios in higher growth segments (especially IP and managed services), and active pipeline of large digital modernization/legacy transformation projects position CGI for long-term revenue visibility and sustained free cash flow generation.

Successful execution of recent acquisitions (BJSS, Daugherty, Aeyon) is expected to unlock revenue synergies, leverage operational efficiencies, and, upon full integration, generate further EBIT margin expansion and EPS accretion.

Read the complete narrative.

Want to see what underpins that fair value gap for CGI? The core of this narrative is measured revenue growth, firmer margins and a future earnings multiple that assumes steady execution. Curious which specific profit and cash flow paths have been baked into that view.

Result: Fair Value of CA$119.85 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, investors still need to weigh the risk that slower contract decisions in key markets, or tougher integration of recent acquisitions, could cap how far this CGI narrative runs.

Find out about the key risks to this CGI narrative.

Next Steps

Given the mixed sentiment around CGI, it makes sense to check the underlying data yourself and not just follow the headlines. If you want a concise view of what the market currently sees as the main positives, take a look at the 4 key rewards.

Looking for more investment ideas beyond CGI?

If CGI has sharpened your focus on quality, do not stop here. Broaden your watchlist now and give yourself more options before the next move in markets.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.