MONTRÉAL - CGI Inc. (TSX: GIB.A) (NYSE: GIB), a leading provider of IT and business consulting services, has announced the renewal of its Normal Course Issuer Bid (NCIB), which is subject to approval by the Toronto Stock Exchange (TSX). The renewal allows the company to continue repurchasing its Class A subordinate voting shares as part of its strategy to enhance shareholder value.
The company's management and Board of Directors view the repurchase of shares as an appropriate allocation of funds. Under the proposed NCIB, CGI may buy back up to 10% of its public float, which equates to 20,457,737 Class A Shares, based on the number of shares outstanding as of January 23, 2024. The purchases are to be made through the TSX, the New York Stock Exchange, and alternative trading systems in Canada, as well as outside of TSX facilities under exemption orders issued by securities regulators.
The average daily trading volume for the six months ending December 31, 2023, was 337,203 shares, setting the daily purchase cap at 84,300 shares, or 25% of this volume, in accordance with TSX rules. All acquired shares will be purchased at market price at the time of the transaction, except for those bought under exemption orders, which may be at a discount.
The repurchase program is set to begin on February 6, 2024, and will conclude on the earlier of February 5, 2025, or when the company has bought back the maximum number of shares permitted or decides to halt the buybacks. During the current NCIB, which will end on February 5, 2024, CGI has repurchased 7,077,246 Class A Shares at an average cost of $127.71 per share, totaling approximately $903.9M.
CGI has also set up an automatic share purchase plan with its broker to allow for share repurchases during self-imposed blackout periods. This information is based on a press release statement from CGI Inc.
The company, established in 1976, employs around 90,500 consultants and professionals globally, offering a range of services from strategic IT and business consulting to systems integration and managed IT services. CGI reported revenue of $14.30B for the fiscal year 2023.
InvestingPro Insights
CGI Inc. (NYSE: GIB) has demonstrated robust financial performance with a market capitalization of 25.85 billion USD, showcasing its significant presence in the IT Services industry. With a strong revenue growth of 11.11% over the last twelve months as of Q4 2023, CGI's strategic endeavors, such as their share repurchase program, reflect their commitment to shareholder value. The company's P/E ratio stands at 21.39, indicating investor confidence in its earnings potential, despite trading at a high valuation relative to near-term earnings growth.
InvestingPro data also reveals CGI's stability, with low price volatility and a 52-week high price percentage of 99.81%, suggesting that the stock is trading near its peak. This stability is further supported by the fact that cash flows can sufficiently cover interest payments, and the company operates with a moderate level of debt. Notably, CGI does not pay a dividend, which aligns with its focus on reinvesting capital to fuel growth and share buybacks.
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