On Mar 14, we updated the research report on information technology services provider, CACI International Inc. CACI.
Based in Arlington, VA, CACI International delivers IT applications and infrastructure to improve communications and secure the integrity of information systems and networks, enhance data collection and analysis, and increase efficiency and mission effectiveness. Over the years, the company has successfully provided support services to the U.S. federal forces.
A leader in IT outsourcing for the U.S. federal government, CACI International has ample exposure to the rapidly growing Department of Defense and Department of Homeland Security budgets. The company uses a significant portion of the funds for the manufacture of systems that helps in the sharing of critical information among all intelligence agencies. We believe the company is comfortably positioned, given its favored relationship with the Department of Defense. Moreover, cyber attacks are creating increased awareness, leading to a heightened demand for cyber solutions.
With solid demand patterns, CACI International has outperformed the Zacks categorized Computer Services industry in the last six months with an average return of 26.8% compared with 7.7% gain for the latter.
In addition, CACI International has a large pipeline of new projects and continues to win more deals at regular intervals. These back-to-back contract wins are the key catalysts to the company’s success. Furthermore, having the government as a big client lends stability to the business and moderates fluctuations in revenues. Although the government’s approval process is usually lengthy, the project continues earning money even years after it has been approved. Moreover, government contracts also improve the visibility of future revenue streams. From 2009 to 2016, the company’s revenues have grown at a CAGR of 4.03%.
CACI International intends to drive operational excellence by intensively focusing on its organic and inorganic growth strategy and strengthening its existing customer relationships while building newer ones. In addition, the company anticipates to significantly benefit from its cost-reduction program. CACI International also remains focused on its strategy to grow in larger markets, drive operational excellence, and leverage mergers and acquisitions to further increase its market share and create long-term value for its shareholders. The strategic partnership with Appcelerator – a provider of leading mobile engagement platform, will likely augment its position in the market. Combining CACI International’s automated security testing, compliance testing and vulnerability detection capabilities with Appcelerator’s comprehensive platform for creating, delivering, and analyzing mobile applications, this partnership enables customers to quickly deploy mobile applications at a lower cost and a higher return on investment (ROI).
CACI International currently has a Zacks Rank #2 (Buy). Some other favorably placed stocks in the industry include CGI Group Inc. GIB, Scientific Games Corporation SGMS and Ebix Inc. EBIX. While CGI and Scientific Games carry a Zacks Rank #2, Ebix sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CGI has a long-term earnings growth expectation of 8% and is currently trading at a forward P/E of 16.47x.
Scientific Games has a long-term earnings growth expectation of 44.2% and has beaten estimates twice in the trailing four quarters, the average positive earnings surprise being 1.6%.
Ebix has a long-term earnings growth expectation of 10% and has beaten estimates in each of the trailing four quarters for an average positive earnings surprise of 14.4%.
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