CGI Inc. (GIB.A) Operational Quality Rating (A) | 2025 Old York Registry
(A) | Technology | IT Consulting & Managed Services
By: Old York Financial
A Private Principal Report
the verdict
Old York Financial has assigned CGI Inc. (GIB.A) an Operational Quality (A) Rating. CGI is the "Metronome of Montreal." It earns an (A) because it operates with industry-leading capital discipline, a massive $31.4 Billion backlog, and a management team that treats share buybacks as a religion.
While it lacks the "Proprietary Software Moat" of a SaaS giant, its Managed Services Gear (55% of revenue) creates a recurring revenue stream that is as sticky as a utility but with much higher capital velocity. It clears our 15% ROIC floor (barely, once adjusted for the M&A bloat), making it a structural peer to the elite energy sovereigns.
the old york analysis
owner earnings: the capital-light engine
CGI doesn't build factories; they hire engineers and sign 10-year outsourcing deals.
2025 Net Cash from Operations: $2.23 Billion
(-) Maintenance CapEx (Estimated): ($0.37 Billion)
(+) Depreciation & Amortization: $0.44 Billion
OLD YORK OWNER EARNINGS: $2.30 Billion
Analyst Note: CGI’s maintenance requirements are tiny at only ~16% of operating cash. This is the "Software/Services Alpha." They generate nearly $1.00 of Owner Earnings for every $7.00 of revenue.
growth & market dominance
The Backlog Moat: $31.45 Billion. CGI has already "sold" two years' worth of revenue. This visibility is why they don't sweat macro downturns.
Government Anchor: 38% of their revenue comes from Government contracts. This is "Recession-Proof" cash. When the private sector cuts spending, governments spend on "Efficiency & Digitization" projects.
The "Buy and Build" Gear: In 2025, they deployed $1.8 Billion on acquisitions. They are a consolidator in a fragmented global market.
operational efficiency
ROIC: 13.6% (Unadjusted) | 16.1% (Old York Adjusted).
Analyst Note: CGI carries $11.6 Billion in Goodwill from decades of acquisitions. Our yardstick "cleans" the ROIC to look at operational performance. On an adjusted basis, they clear the 15% floor.
EBIT Margin: 16.4% (Industry-leading for services).
ROE: 16.8% (Solid, but suppressed by their conservative balance sheet).
the fortress check
Net Debt: $3.45 Billion.
Net Debt to EBITDA: 1.2x.
Capital Allocation: THE SHAREHOLDER CANNIBAL. In 2025, they spent $1.27 Billion buying back their own stock. Over the last decade, they have retired nearly 30% of the company. They also recently introduced a dividend (13% increase in late 2025), signaling they have more cash than they know what to do with.
why it’s not rated (AA)
The Managed Services Friction: Unlike a AA software company (like Microsoft), CGI has to add people to grow. Their margins are "human-capped." They don't have the infinite scalability of a pure code-based business.
Integration Risk: Because they are an M&A machine, there is always the risk of a "bad bite." 2025 saw $213 million in restructuring and integration costs. while (AA) companies are usually "cleaner."
Goodwill Weight: Their balance sheet is "bloated" with $11B of intangible air. While they manage it well, it creates a drag on the "Pure ROIC" that an (AA) sovereign would not have.
final determination
Rating: Old York Quality (A)
Classification: The Metronome.
CGI is the "Owner's Manual" for IT services. It receives an (A) because it combines the safety of a government utility with the capital-light returns of a tech firm. It is a "Compounder Sovereign."
Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager.
