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CACI Secures US Army Deal to Boost Simulation Technology

Zacks Equity Research

CACI International Inc CACI, a defense and intelligence information technology company was recently awarded a contract to support modeling and simulation technology for the U.S. Army Research, Development, and Engineering Command’s Communications-Electronics Research, Development, and Engineering Center Night Vision and Electronic Sensors Directorate. The three-year task order, worth $31 million will help the company strengthen its foothold in its Surveillance and Reconnaissance market.

Per this contract, Arlington, VA-based CACI will help in the development of electro-optic/infrared and SIGINT (Signals Intelligence) payload modeling and simulation capabilities. These training systems will augment the Army’s Airborne Intelligence, Surveillance, and Reconnaissance (A-ISR) units. The company will also help pilots and trainers develop and execute A-ISR programs.

CERDEC NVESD does research and development of advanced night vision and other sensor technologies, including long-range surveillance, infrared weapon sights and target acquisition systems, which boost the Armed Forces’ operational advantage in daytime, night time, and limited visibility situations.

CACI continues to win deals at regular intervals. These back-to-back contracts will boost the company’s growth trajectory. It intends to drive operational excellence by focusing on its organic and inorganic growth strategy, and strengthening existing customer relationships while building new ones.

On the back of continuous contract wins, CACI outperformed the Zacks categorized Computer Services industry with an average return of 3.9% compared with 2.5% for the latter, over a period of 30 days. In addition, over the same time frame, earnings estimates for the current quarter increased 1.4%. This estimate trend was impacted by the company’s organic growth, which looks promising.

A leader in IT outsourcing for the U.S. federal government, CACI earns its revenues through four customer groups: the Department of Defence (DoD), Federal Civilian Agencies, Commercial and Other, and State and Local Governments. The company’s DoD customers include the U.S. Army (the largest customer) and the Navy. Meanwhile, federal civilian agencies provide litigation support services to the Department of Justice.

Having the government as one of the biggest clients lends stability to the business and mitigates some of the fluctuations in revenue. Although the government generally has a lengthy approval process, the project continues to earn money years after approval. Moreover, government contracts improve the visibility on future revenue streams.

CACI carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space include CSG Systems International Inc. CSGS, Ebix Inc. EBIX and WidePoint Corporation WYY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CSG Systems has beaten estimates in all the trailing four quarters with an average positive earnings surprise of 24.9%.

Ebix has a long-term earnings growth expectation of 10% and has beaten estimates in all the trailing four quarters with an average positive earnings surprise of 15%.

WidePoint has beaten estimates in all the trailing four quarters with an average positive earnings surprise of 37.5%.

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