CGI Group (TSX: GIB.A) put up some big numbers this year. Thanks to its $586 million acquisition of American Management Systems in May, the IT services firm grew revenues by 20.8% to $3.2 billion, and earnings by 23.8% to $219.6 million. Yet those numbers and the company's upbeat quarterly figures have failed to inspire much confidence in investors. Shares in CGI finished the year up just 7.5%. Perhaps more telling, the stock's trailing 12-month price-to-earnings multiple of 15.5 is close to its lowest level in nearly 10 years. Still, there may be hope on the horizon for shareholders. Organic growth — revenue increases after stripping out gains from acquisitions and currency fluctuations — appears to be on the rise. This key driver of stock appreciation came in at just 2% for 2004 compared with the same period a year ago, but improved to 5.8% in the most recent quarter. Further increases to this particular number could get investors excited about CGI once more.
EBay (Nasdaq: EBAY) soared to new heights this year, and was trading in the US$110 range in mid-November. At the same time, however, the Internet-auction company's growth appears to be slowing. Earnings at the San Jose-based firm (see “Their kind of town,” page 87) are expected to rise 52% in 2004, but improve only 25% in 2005. And earlier this year, eBay broke its streak of gross merchandise volume (the total value of successfully auctioned items) increases between consecutive quarters. Finally, analysts polled by Thomson First Call recently lowered their five-year earnings growth rate for the company to 35% from their estimate of 38% in September. Some might argue the stock, which trades at an exceedingly rich trailing 12-month price-to-earnings multiple of 97.7, is far from mature. Future drivers of growth include eBay's international markets and PayPal, the firm's online payment company. Nevertheless, eBay's days as a high-flier may be numbered.