Financial Analysis: CGI Group (GIB) vs. International Business Machines (IBM)
CGI Group (NYSE: GIB) and International Business Machines (NYSE:IBM) are both large-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.
This table compares CGI Group and International Business Machines’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|International Business Machines||14.43%||68.68%||10.82%|
This is a breakdown of recent ratings and target prices for CGI Group and International Business Machines, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|International Business Machines||6||15||9||0||2.10|
CGI Group presently has a consensus target price of $72.33, indicating a potential upside of 32.36%. International Business Machines has a consensus target price of $158.62, indicating a potential upside of 4.70%. Given CGI Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe CGI Group is more favorable than International Business Machines.
Risk & Volatility
CGI Group has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, International Business Machines has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500.
Institutional and Insider Ownership
66.7% of CGI Group shares are owned by institutional investors. Comparatively, 57.1% of International Business Machines shares are owned by institutional investors. 9.9% of CGI Group shares are owned by company insiders. Comparatively, 0.2% of International Business Machines shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
International Business Machines pays an annual dividend of $6.00 per share and has a dividend yield of 4.0%. CGI Group does not pay a dividend. International Business Machines pays out 50.1% of its earnings in the form of a dividend. International Business Machines has increased its dividend for 17 consecutive years.
Earnings & Valuation
This table compares CGI Group and International Business Machines’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|CGI Group||$8.26 billion||1.68||$788.50 million||$2.60||21.02|
|International Business Machines||$79.92 billion||1.75||$11.87 billion||$11.97||12.66|
International Business Machines has higher revenue and earnings than CGI Group. International Business Machines is trading at a lower price-to-earnings ratio than CGI Group, indicating that it is currently the more affordable of the two stocks.
International Business Machines beats CGI Group on 11 of the 17 factors compared between the two stocks.
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.
About International Business Machines
International Business Machines Corporation (IBM) is a technology company. The Company operates through five segments: Cognitive Solutions, Global Business Services (GBS), Technology Services & Cloud Platforms, Systems and Global Financing. The Cognitive Solutions segment delivers a spectrum of capabilities, from descriptive, predictive and prescriptive analytics to cognitive systems. Cognitive Solutions includes Watson, a cognitive computing platform that has the ability to interact in natural language, process big data, and learn from interactions with people and computers. The GBS segment provides clients with consulting, application management services and global process services. The Technology Services & Cloud Platforms segment provides information technology infrastructure services. The Systems segment provides clients with infrastructure technologies. The Global Financing segment includes client financing, commercial financing, and remanufacturing and remarketing.
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