Intrinsic Value Capgemini SE (CAP.SW)

• Previous Close: CHF109.35
• Intrinsic Value: n/a
• Upside potential: n/a%

Stock Valuation Context

Business Model And Market Position

Capgemini SE is a global leader in consulting, digital transformation, and technology services, operating across the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company specializes in strategy and transformation services, leveraging expertise in data science, creative design, and emerging technologies to help clients navigate the digital economy. Its applications and technology services focus on modernizing IT environments, cloud solutions, cybersecurity, and quality assurance, catering to diverse industries such as consumer goods, banking, and telecommunications. Capgemini’s business process outsourcing and transactional services further enhance its value proposition, supporting clients in optimizing IT infrastructure and operational efficiency. The firm’s strategic partnerships, such as with CONA Services LLC, reinforce its ability to deliver tailored digital solutions for retail and consumer products sectors. With a strong presence in high-growth markets and a reputation for innovation, Capgemini maintains a competitive edge in the IT services industry, positioning itself as a trusted partner for enterprises undergoing digital transformation.

Revenue Profitability And Efficiency

Capgemini reported revenue of CHF 22.52 billion in FY 2023, with net income of CHF 1.66 billion, reflecting a robust operating margin. The company’s diluted EPS stood at CHF 9.37, supported by strong operational cash flow of CHF 2.53 billion. Capital expenditures were modest at CHF -254 million, indicating disciplined investment in growth initiatives. These metrics underscore Capgemini’s ability to balance revenue expansion with cost efficiency.

Earnings Power And Capital Efficiency

The company’s earnings power is evident in its consistent profitability, with net income representing a healthy return on revenue. Operating cash flow significantly exceeds capital expenditures, highlighting efficient capital deployment. Capgemini’s focus on high-margin digital services and cost optimization contributes to its strong earnings profile, ensuring sustainable returns for shareholders.

Balance Sheet And Financial Health

Capgemini maintains a solid financial position, with cash and equivalents of CHF 3.54 billion against total debt of CHF 5.07 billion. The manageable leverage ratio and strong liquidity position provide flexibility for strategic investments and acquisitions. The balance sheet reflects prudent financial management, supporting long-term stability and growth.

Growth Trends And Dividend Policy

Capgemini has demonstrated steady growth, driven by demand for digital transformation services. The company’s dividend policy is shareholder-friendly, with a dividend per share of CHF 3.37 in FY 2023. This aligns with its commitment to returning capital while reinvesting in high-growth areas, ensuring a balanced approach to value creation.

Valuation And Market Expectations

With a market capitalization of CHF 18.73 billion and a beta of 1.03, Capgemini is viewed as a stable yet growth-oriented investment. The market values its leadership in IT services and digital transformation, with expectations of sustained demand for its expertise. The valuation reflects confidence in its ability to capitalize on industry trends.

Strategic Advantages And Outlook

Capgemini’s strategic advantages include its global footprint, deep industry expertise, and focus on innovation. The company is well-positioned to benefit from the ongoing shift toward digitalization across sectors. Its outlook remains positive, supported by strong demand for consulting and technology services, strategic partnerships, and a disciplined growth strategy.

Sources

Company filings, investor presentations, Bloomberg