Financial Comparison: CGI Group (NYSE:GIB) vs. CSG Systems International (NASDAQ:CSGS)

CGI Group (NYSE:GIB) and CSG Systems International (NASDAQ:CSGS) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Volatility & Risk

CGI Group has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500. Comparatively, CSG Systems International has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Dividends

CGI Group pays an annual dividend of $0.48 per share and has a dividend yield of 0.5%. CSG Systems International pays an annual dividend of $1.28 per share and has a dividend yield of 1.7%. CGI Group pays out 9.1% of its earnings in the form of a dividend. CSG Systems International pays out 43.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CSG Systems International has increased its dividend for 12 consecutive years. CSG Systems International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for CGI Group and CSG Systems International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CGI Group	0	3	1	1	2.60
CSG Systems International	0	8	5	0	2.38

CGI Group currently has a consensus price target of $117.00, suggesting a potential upside of 26.69%. CSG Systems International has a consensus price target of $73.81, suggesting a potential downside of 4.15%. Given CGI Group’s stronger consensus rating and higher probable upside, analysts plainly believe CGI Group is more favorable than CSG Systems International.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CGI Group	10.41%	18.55%	9.97%
CSG Systems International	6.85%	42.54%	8.38%

Insider & Institutional Ownership

66.7% of CGI Group shares are held by institutional investors. Comparatively, 91.1% of CSG Systems International shares are held by institutional investors. 9.9% of CGI Group shares are held by insiders. Comparatively, 3.1% of CSG Systems International shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares CGI Group and CSG Systems International”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CGI Group	$11.38 billion	1.78	$1.19 billion	$5.26	17.56
CSG Systems International	$1.20 billion	1.83	$86.85 million	$2.95	26.11

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

Summary

CGI Group beats CSG Systems International on 10 of the 18 factors compared between the two stocks.

About CGI Group

CGI Inc., together with its subsidiaries, provides information technology (IT) and business process services. Its services include the business and strategic IT consulting, systems integration, and software solutions. The company also provides application development, modernization and maintenance, holistic enterprise digitization, automation, hybrid and cloud management, and business process services; intellectual property-based solutions; business consulting; managed IT services; and IT infrastructure services. It serves clients operating in government, banking and capital market, health, utility, communication and media, oil and gas, space, manufacturing, insurance, life sciences, retail and consumer service, and transportation and logistics sectors. The company operates in Canada, France, Spain, Portugal, the United States, Germany, Sweden, Norway, the United Kingdom, Australia, Finland, Poland, Baltics, the Netherlands, Denmark, Czech Republic, India, the Philippines, Asia Pacific, and internationally. Western and Southern Europe; Australia; Scandinavia; Finland, Poland, and Baltics; the United States; the United Kingdom; and the Asia Pacific. The company was formerly known as CGI Group Inc. and changed its name to CGI Inc. in January 2019. CGI Inc. was founded in 1976 and is headquartered in Montreal, Canada.

About CSG Systems International

CSG Systems International, Inc., together with its subsidiaries, provides revenue management and digital monetization, customer experience, and payment solutions primarily to the communications industry in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers Advanced Convergent Platform, a private SaaS platform; and related solutions, including service technician management, analytics, electronic bill presentment, etc. The company also provides a public SaaS-based revenue management and payments platform. In addition, it offers managed services; and professional services to implement, configure, and maintain its solutions, as well as licenses various solutions, such as mediation, partner management, rating, and charging. Further, the company provides operational services, including infrastructure management comprised of hardware, application, and environmental management; application configuration management, such as configuration development, release, and deployment; and business operations management, which includes event processing, revenue management, and settlement. It serves retail, financial services, healthcare, insurance, and government entities. The company was incorporated in 1994 and is headquartered in Englewood, Colorado.