Intrinsic Value Capgemini SE (CAP.PA)

• Previous Close: €131.20
• Intrinsic Value: €63.04
• Upside potential: -52%

Stock Valuation Context

Business Model And Market Position

Capgemini SE is a global leader in consulting, digital transformation, technology, and engineering services, operating across the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company’s revenue model is built on delivering end-to-end IT solutions, including strategy and transformation services, application development, cloud computing, cybersecurity, and business process outsourcing. Capgemini serves a diverse clientele spanning industries such as consumer goods, financial services, manufacturing, and public sector, leveraging its expertise to drive digital innovation and operational efficiency. Positioned as a trusted partner for enterprises navigating digital disruption, Capgemini differentiates itself through deep industry knowledge, scalable technology platforms, and strategic alliances, such as its partnership with CONA Services LLC to enhance retail and consumer product solutions. The firm’s ability to integrate cutting-edge technologies like AI and data science into client workflows reinforces its competitive edge in the crowded IT services market.

Revenue Profitability And Efficiency

Capgemini reported revenue of €22.1 billion for the latest fiscal period, with net income of €1.67 billion, reflecting a robust operating margin. Diluted EPS stood at €9.47, supported by strong cash flow generation, with operating cash flow reaching €2.53 billion. Capital expenditures of €315 million indicate disciplined reinvestment in growth initiatives, while the firm maintains a healthy balance between profitability and operational efficiency.

Earnings Power And Capital Efficiency

The company demonstrates solid earnings power, with a net income margin of approximately 7.6%, underscoring its ability to convert revenue into profit effectively. Capgemini’s capital efficiency is evident in its ability to fund growth while maintaining shareholder returns, as seen in its €6.8 per share dividend. The firm’s focus on high-margin digital services enhances its return on invested capital.

Balance Sheet And Financial Health

Capgemini’s balance sheet reflects financial stability, with €2.79 billion in cash and equivalents against total debt of €6.08 billion. The manageable leverage ratio and strong liquidity position provide flexibility for strategic investments and M&A. The company’s ability to generate consistent cash flow supports its debt obligations while funding growth initiatives.

Growth Trends And Dividend Policy

Capgemini has demonstrated steady growth, driven by demand for digital transformation services across industries. The company’s dividend policy, with a payout of €6.8 per share, reflects a commitment to returning capital to shareholders while retaining funds for expansion. Future growth is likely to be fueled by cloud adoption, AI integration, and geographic expansion in emerging markets.

Valuation And Market Expectations

With a market capitalization of €24.97 billion and a beta of 0.972, Capgemini is valued as a stable player in the IT services sector. The market appears to price in sustained demand for digital transformation, though competitive pressures and macroeconomic conditions could influence future valuation multiples.

Strategic Advantages And Outlook

Capgemini’s strategic advantages lie in its global footprint, deep industry expertise, and ability to deliver integrated digital solutions. The outlook remains positive, supported by secular trends in cloud computing, cybersecurity, and AI. However, execution risks and talent retention in a competitive labor market could pose challenges to sustained growth.

Sources

Company filings, market data