Q: Your thoughts on GIB.A's results released today, please.
5i Research Answer:
EPS of $2.1 beat estimates of $2.09 and sales of $4.09B beat estimates of $4.01B. Sales grew 11.4% year-over-year, but earnings declined 7.1%. GIB.A is seeing strong momentum on AI-related contracts in Q3, but margins and booking slipped, although its backlog grew. Most analysts maintained their ratings and while the stock fell, forward analyst earnings expectations increased slightly. It trades at a decent valuation of 15X forward earnings, and forward earnings growth estimates are in the high single-digit range. Momentum is negative, but we believe this name can perform well over the long-term. We would be comfortable holding here, but would prefer to wait for better momentum to add or initiate a position here.