Reviewing CGI Group (NYSE:GIB) and DigitalOcean (NYSE:DOCN)

DigitalOcean (NYSE:DOCN) and CGI Group (NYSE:GIB) are both large-cap technology companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Institutional and Insider Ownership

49.8% of DigitalOcean shares are owned by institutional investors. Comparatively, 66.7% of CGI Group shares are owned by institutional investors. 1.0% of DigitalOcean shares are owned by company insiders. Comparatively, 9.9% of CGI Group shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for DigitalOcean and CGI Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DigitalOcean	0	3	12	2	2.94
CGI Group	1	6	0	0	1.86

DigitalOcean currently has a consensus price target of $152.81, indicating a potential upside of 32.90%. CGI Group has a consensus price target of $83.67, indicating a potential upside of 15.55%. Given DigitalOcean’s stronger consensus rating and higher probable upside, equities research analysts plainly believe DigitalOcean is more favorable than CGI Group.

Profitability

This table compares DigitalOcean and CGI Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DigitalOcean	23.26%	31.01%	5.76%
CGI Group	10.54%	18.83%	9.83%

Volatility and Risk

DigitalOcean has a beta of 1.57, suggesting that its stock price is 57% more volatile than the S&P 500. Comparatively, CGI Group has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.

Earnings and Valuation

This table compares DigitalOcean and CGI Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DigitalOcean	$901.43 million	13.31	$259.26 million	$2.19	52.51
CGI Group	$11.38 billion	1.32	$1.19 billion	$5.83	12.42

CGI Group has higher revenue and earnings than DigitalOcean. CGI Group is trading at a lower price-to-earnings ratio than DigitalOcean, indicating that it is currently the more affordable of the two stocks.

Summary

DigitalOcean beats CGI Group on 9 of the 15 factors compared between the two stocks.

About DigitalOcean

DigitalOcean Holdings, Inc., through its subsidiaries, operates a cloud computing platform in North America, Europe, Asia, and internationally. The company’s platform provides on-demand infrastructure and platform tools for developers, start-ups, and small and growing digital businesses. It also offers infrastructure-as-a-service (IaaS) solutions comprising compute and storage services, as well as networking projects, including Cloud Firewalls software, Managed Load Balancers software, and Virtual Private Cloud (VPC). The company also provides platform-as-a-service (PaaS) solutions, such as managed databases; managed Kubernetes and container registry; application platform to build, deploy, and scale applications; Functions, a serverless compute solution; and Uptime for real-time uptime and latency alerts, as well as software-as-a-service (SaaS), including managed hosting and DigitalOcean Marketplace, a platform where developers can find pre-configured applications and solutions. In addition, it offers artificial intelligence (AI)/machine learning (ML) applications comprising GPU virtual machines for scaling AI applications; Notebooks, a simple cloud workspace that runs on GPUs that provides a managed interactive development environment for exploring data, and training and building machine learning models; and Deployments for deploying their machine learning model as an API endpoint. The company’s customers include software engineers, researchers, data scientists, system administrators, students, and hobbyists. Its customers use its platform in various industry verticals and for a range of use cases, such as web and mobile applications, website hosting, e-commerce, media and gaming, personal web projects, managed services, and AI/ML applications. DigitalOcean Holdings, Inc. was incorporated in 2012 and is headquartered in New York, New York.

About CGI Group

CGI Inc., together with its subsidiaries, provides information technology (IT) and business process services. Its services include the business and strategic IT consulting, systems integration, and software solutions. The company also provides application development, modernization and maintenance, holistic enterprise digitization, automation, hybrid and cloud management, and business process services; intellectual property-based solutions; business consulting; managed IT services; and IT infrastructure services. It serves clients operating in government, banking and capital market, health, utility, communication and media, oil and gas, space, manufacturing, insurance, life sciences, retail and consumer service, and transportation and logistics sectors. The company operates in Canada, France, Spain, Portugal, the United States, Germany, Sweden, Norway, the United Kingdom, Australia, Finland, Poland, Baltics, the Netherlands, Denmark, Czech Republic, India, the Philippines, Asia Pacific, and internationally. Western and Southern Europe; Australia; Scandinavia; Finland, Poland, and Baltics; the United States; the United Kingdom; and the Asia Pacific. The company was formerly known as CGI Group Inc. and changed its name to CGI Inc. in January 2019. CGI Inc. was founded in 1976 and is headquartered in Montreal, Canada.