NEW YORK (
-- CGI Group
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. However, as a counter to these strengths, we find that net income has been generally deteriorating over time.
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Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues slightly increased by 2.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- After a year of stock price fluctuations, the net result is that GIB's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- CGI GROUP INC's earnings per share declined by 23.3% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past two years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, CGI GROUP INC increased its bottom line by earning $1.57 versus $1.25 in the prior year.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the IT Services industry. The net income has significantly decreased by 26.4% when compared to the same quarter one year ago, falling from $118.44 million to $87.20 million.
CGI Group Inc., through its subsidiaries, provides information technology (IT) and business process services in Canada, the United States, India, Europe, and the Asia Pacific. The company has a P/E ratio of 15.7, below the average internet industry P/E ratio of 16.7 and below the S&P 500 P/E ratio of 17.7. CGI Group has a market cap of $5.26 billion and is part of the
industry. Shares are up 22.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.