Vmware (NYSE: VMW) and CGI Group (NYSE:GIB) are both large-cap computer and technology companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Risk & Volatility

Vmware has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, CGI Group has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Vmware and CGI Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vmware 0 12 18 0 2.60
CGI Group 1 3 4 0 2.38

Vmware presently has a consensus price target of $112.65, suggesting a potential upside of 3.21%. CGI Group has a consensus price target of $61.33, suggesting a potential upside of 19.23%. Given CGI Group’s higher possible upside, analysts plainly believe CGI Group is more favorable than Vmware.

Earnings and Valuation

This table compares Vmware and CGI Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vmware $7.09 billion 6.30 $1.85 billion $3.16 34.54
CGI Group $8.64 billion 1.76 $1.45 billion $2.72 18.91

Vmware has higher revenue, but lower earnings than CGI Group. CGI Group is trading at a lower price-to-earnings ratio than Vmware, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Vmware and CGI Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vmware 17.81% 18.06% 9.01%
CGI Group 10.18% 17.10% 9.50%

Insider & Institutional Ownership

21.8% of Vmware shares are held by institutional investors. Comparatively, 70.7% of CGI Group shares are held by institutional investors. 0.5% of Vmware shares are held by company insiders. Comparatively, 9.9% of CGI Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Vmware beats CGI Group on 8 of the 14 factors compared between the two stocks.

About Vmware

VMware, Inc. is an information technology (IT) company. The Company is engaged in development and application of virtualization technologies with x86 server-based computing, separating application software from the underlying hardware. The Company offers various products, which allow organizations to manage IT resources across private clouds and multi-cloud, multi-device environments by leveraging synergies across three product categories: Software-Defined Data Center (SDDC), Hybrid Cloud Computing and End-User Computing (EUC). The SDDC is designed to transform and modernize the data center into an on-demand service that addresses application requirements by abstracting, pooling and automating the services that are required from the underlying hardware. The Company provides many storage and availability products to offer data storage and protection options to all applications running on the vSphere platform.

About CGI Group

CGI Group Inc. (CGI), directly or through its subsidiaries, manages information technology (IT) services, as well as business process services (BPS). The Company’s services include the management of IT and business functions (outsourcing), systems integration and consulting, as well as the sale of software solutions. The Company’s segments are United States of America (U.S.); Nordics; Canada; France (including Luxembourg and Morocco) (France); United Kingdom (U.K.); Eastern, Central and Southern Europe (primarily the Netherlands and Germany) (ECS); and Asia Pacific (including Australia, India and the Philippines) (Asia Pacific). Its services in an end-to-end engagement include application development, integration and maintenance; technology infrastructure management; and business process services, such as collections and payroll management. Its Internet Protocol (IP)-based business solutions include CGI Advantage, Momentum, Credit Services Solutions, CGI Atlas360 and CGI Trade360.

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