New Business Segments for CACI

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CACI International Inc. (CACI), a leading provider of IT outsourcing services to the U.S. federal government, recently declared that it has developed new business segments.

These newly introduced business units are scheduled to start functioning from January 1, 2013. The company has formed these groups with the intention of grasping the increasing growth prospects in its Federal Civilian and Business Systems markets worth $72 billion and $8 billion, respectively.

The company’s Federal Civilian, advanced Healthcare and Investigative and Litigation Support and Business Systems services are improving continuously led by its acquired businesses and high organic growth. The company recently completed the acquisition of Emergint Technologies, Inc. Earlier, in July 2012 the company acquired Delta Solutions and Technologies, Inc.; and Advanced Programs Group, LLC. in October 2011. These acquisitions are vital in the long run for the company as these will help fortifying CACI’s foothold in the growing Federal Civilian and Business Systems arena.

Rick Dansey has been chosen by the company to lead Federal Civilian Solutions business group. He will be engaged in augmenting the company’s business in Federal Civilian, Healthcare, and Investigative and Litigation Support market arena. In addition, Valerie Lyons, who played a key role in Delta acquisition, will be leading the company’s Business Systems Solutions business segments.

Management stated that, owing to the continuous development in the Federal Civilian/Healthcare/Litigation Support and Business Systems markets, the company has decided to focus more on these areas. Hence, by forming these new groups the company has paved the way for new growth opportunities in these specified sectors. With this accomplishment, the company will be able to successfully fulfill its client’s needs and provide high return to its shareholders.

Based in Arlington, Virginia, CACI International has ample exposure to the rapidly growing Department of Defense and Department of Homeland Security budgets. CACI International’s system integration skills and intelligence expertise consume a significant portion of the funds earmarked for the Department of Homeland Security while creating systems that will foster the sharing of critical information among all intelligence agencies. We believe the company is comfortably positioned, given its favored relationship with the DoD and its strong proposal position.

However, the company still needs to be wary of its formidable competitors who include big names such as CGI Group, Inc. (GIB) and ManTech International Corporation (MANT). Recently ManTech International and Genex Systems, LLC jointly received a $23 million from Marine Corps War fighting Laboratory (:MCWL). Per the contract, ManTech International will be engaged in providing engineering, analytical, technical, and business support services to MCWL. Hence, CACI should not become too complacent with its successful business model.

The current Zacks Consensus Estimates for CACI International Inc. are $1.64 and $6.60 per share for the second quarter of fiscal 2013 and fiscal 2013 (ending June 30, 2013), respectively. The estimates represent a year-over-year growth of 8.7% for the second quarter and 11.1% for fiscal 2013.

At present, we have a Neutral recommendation on CACI International Inc. The stock currently carries a Zacks #3 Rank, which translates into a short-term Hold rating.

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