CGI Group Inc - Aggressive Growth

CGI Group Inc (GIB) has analysts impressed, once again. Estimates are rising which has kept valuations in check.

This Zacks #1 Rank (Strong Buy) is a great growth play and well positioned to capitalize heading into 2011.

Company Description

CGI Group provides end-to-end IT and business process services around the world. Services include consulting, system integration and other IT functions.

Beat the Street

On Nov 9 CGI Group reported fourth-quarter earnings results that included an 8.7% improvement in revenue, to just over $1 billion. Using a constant currency basis, however, that is a 13.8% increase.

Earnings per share came out to 35 cents, which was 6 cents better than the Zacks Consensus Estimate. CGI Group has toped expectations in all but 3 quarters for the past 5 years. The company met expectations in those 3 quarters.

Ready to Hit the Ground Running

CGI Group's President and CEO said the company is in "an excellent position strategically, operationally and financially," heading into the next fiscal year. Currently the company expects earnings per share to improve between 15% and 20% for the next year or 2.

Analysts Agree

After hearing the news analysts quickly revised estimates higher. Forecast for fiscal 2011 jumped 13 cents, to $1.41. Estimates for next year are coming in at $1.59, up 15 cents. These levels represent annual growth rates of 9% and 13%, respectively.

And Value to Boot

Thanks to those upward revisions, shares are still trading with attractive valuations. The forward P/E is just 11 times and the PEG ratio is coming in just under 1.0.

You can see below that those rising estimates have been on pace, more or less, with that rise in share price. Just a good example of improving earnings leading to strong gains.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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