Financial performance: Capgemini's financial results, including revenues, earnings and margins, have a direct impact on its share price. Strong performance can lead to an increase in the share price, while disappointing results can have the opposite effect.
Contracts and orders: Large contracts won by Capgemini, as well as the level of its future orders, can influence investor sentiment and therefore its share price. Announcements of new contracts or strategic partnerships may be viewed positively by the market.
Industry trends: Trends in the IT services industry, including demand for consulting, software development and digital transformation services, may impact Capgemini's share price. Sustained growth in the sector may be favourable to the company, while a contraction in the market may weigh on its share price.
Competition: Competitive movements, such as the entry of new players into the market or the actions of major competitors, may also influence Capgemini's share price. Increased competition may put pressure on the company's margins and profitability, which could be reflected in its share price.
Global economic conditions: Global economic conditions, such as economic growth, interest rates and currency fluctuations, may also impact Capgemini's share price. Favourable economic conditions may support demand for its services, while unfavourable economic conditions may have the opposite effect.
A good knowledge of the company is essential if you are thinking of selling or buying Capgemini shares. Understanding the company's specific businesses and revenue streams will help you better analyse its growth opportunities. Here is a complete overview of the company:
Capgemini SE is a French company that operates in the IT sector. The company is listed on the Euronext Paris market and is part of the NASDAQ stock market index. It is one of the world's largest providers of IT services.
To better understand the activities of the Capgemini Group and its various areas of intervention, they can be divided into four main areas of activity:
It is also interesting to know the geographical distribution of Capgemini's revenues. Although French, Capgemini only generates 21.7% of its turnover in the French market. The UK market generates 11% of turnover and the rest of Europe 29.7%. As regards markets outside the European Union, Capgemini generates 30.5% of its revenues in North America and the remaining 7.1% of revenues in Asia-Pacific and Latin America.
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Of course, you also need to be able to carry out a full study of Capgemini's competition if you want to understand how the group might perform in its industry. Here is a complete presentation of the biggest players in this sector and their activities and specificities.
Of course, the IBM group is a direct competitor of Capgemini and an American multinational specialising in various fields including computer hardware, software and IT services. Founded in 2011, it has quickly become a major IT company in the world and was even the world's largest market capitalisation between the 1970s and 1980s.
Another major competitor to Capgemini is the Accenture Group which is an international consulting and technology company that was founded in 1989 as Andersen Consulting following its separation from the Andersen Group. In 2000 it changed its name to Accenture. The group is also one of the world's largest consulting firms and a Fortune Global 500 company. Its consultants work in the areas of business strategy, consulting, digital transformation, technology and operations, such as third-party management, information systems, cloud and IT security. It has more than 459,000 employees and is present in more than 120 countries. In recent years, the group has invested heavily in digital and technology.
The Atos group is another digital services company, this time French, which was created in 1997. It is currently one of the 10 largest companies of its kind in the world and has an annual turnover of more than EUR 11 billion with almost 110,000 employees. Its activities are carried out in a total of 73 countries. Atos is the European leader in cloud, cybersecurity and supercomputing and is listed on the CAC 40 stock exchange index.
Another competitor to Capgemini is CGI Group Inc, a Canadian company based in Montreal that specialises in information technology consulting, systems integration, outsourcing and solutions. It was founded in 1976 with a single client before expanding. In its first year of operation, the company generated over $138,000 in revenue. Today, the CGI Group has become one of the 5 largest groups in this sector worldwide. The company currently employs more than 77,000 people, notably through its various subsidiaries.
A more recent competitor of Capgemini is the Amazon group and more particularly its Amazon Web Services division which specialises in on-demand cloud computing services for businesses and individuals. Over time, this subsidiary has become one of the main sources of revenue for the Amazon group.
Finally, the Deloitte Group, a British multinational firm based in London, is also worth keeping an eye on, as it is one of the world's leading networks of audit and consulting firms. Each member firm of Deloitte is a separate and independent legal entity. Deloitte is currently the largest audit firm in the world and the leader in France. It currently employs over 312,000 people.
In the beginning of the decade 2000 CapGemini announced the creation of a joint venture with Vodafone with the objective of supplying companies with IT services directly through mobile telephones. This new innovative technological joint venture was owned 50/50 by both companies.
In 2011 the QlikTech Group, the world leader in professional IT sector by user signed an international agreement with CapGemini. Through this partnership CapGemini offered innovative services and solutions to its clients using the QlikView platform.
In 2012, the CapGemini Group signed a partnership agreement with the Salesforce editorial company with the objective of marketing a combined offer for assisting clients in their transition to the Cloud.
In 2016, CapGemini joined with Valeo to create a new partnership which was aimed at creating Mov’InBlue, a smart mobility solution for company vehicle fleets and rental vehicle companies. This solution is currently available throughout France.
Firstly, the CapGemini Company benefits from a considerable advantage from its position on the European and indeed global markets in its activity sector. CapGemini is in fact in the top position in the sector of IT services in Europe and holds tenth position worldwide in this activity sector.
From a geographical point of view, CapGemini has also made great efforts to increase its presence worldwide, notably through a policy of decreasing its activities in Europe including the French, British and Irish markets in favour of the American market which is currently the major geographical market for this company. CapGemini also benefits from a growing presence in emerging markets such as the Asian countries.
Of course, the fact that CapGemini is specialised in IT services offers the company a certain advantageous position in relation to digital transition which is relevant to all businesses worldwide.
The group also counts on its offshore development to remain competitive against strong competition. In fact, CapGemini continues to develop its offshore growth with over 2/3 of its company in countries where the personnel costs, therefore that of production in general, are lower, such as India.
CapGemini can also count upon its expansion contracts to ensure profits for the coming years. It can thereby, for example, rework its taxation obligations with the British administration to ensure a comfortable revenue over several years.
Investors and shareholders in the CapGemini Group are also reassured by the excellent visibility offered by predicted future financial results with an order book that is higher than last year’s turnover. This is a promising indication regarding the growth of the company.
Finally, the group gains points by completing payments to investors in the form of shares in a recurring manner.
Firstly it should be remembered that CapGemini exercises its activities in a sector that is highly sensitive to deflation and which is also highly competitive. The group only holds tenth position worldwide and has trouble gaining new parts of the market in this context.
The finances of the group are also particularly sensitive to the personnel costs. These costs actually represent nearly 2/3 of the operating costs of the company and can therefore prove to be debilitating.
We are also disappointed by the significant slowdown in growth of the company’s activities on the American continent. This lack of growth is mainly due to a decrease in the growth of the energy markets, particularly the natural gas and oil markets. Concerning other markets the analysts have also communicated their doubts and anxiety relating to the future of the British market over the medium term and the possibilities of a recession that would directly influence the sales of CapGemini in this country.
Finally, although the group is increasingly developing its activities in other countries its presence in emerging countries is still insufficient compared to those of its major competitors that have long been present, notably in Pacific Asia where CapGemini only achieves 5% of its sales.
As at November 2020, the capital of the Capgemini Group was divided into different types of shareholders and it can be advantageous to be aware of the different categories. At this date 6.60% of the group’s shares were held by individual shareholders, 5.81% by the FMR LLC, and 5.20% by the group’s employees. Finally, 0.20% of the group’s share capital was held by Mr. Paul Hermelin and 0.10% by the Capgemini Group itself.
At present, the latest financial results of the Capgemini Group are those of the financial year 2019. By examining these we note that the net result for the group during this period stood at 852 million Euros. The PER for 2019 was 17.84 and the dividend paid to shareholders was €1.80 with a return of 6.40%. Finally, the group also published certain other interesting figures such as the amount of its capital which stood at 8,419 million Euros.
There are of course different methods enabling the appraisal of the Capgemini share price and the examination of its probable future movements. Ideally you could combine the signals provided by the fundamental analysis, based on the scrutiny of events and publications that influence the price of this asset, with those signals provided by a technical analysis that uses stock market charts and trend indicators.
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