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CACI's Growth Prospects Bright on Government Contract Wins
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On Dec 27, 2016, Zacks Investment Research upgraded CACI International Inc (CACI - Free Report) to a Zacks Rank #2 (Buy). Going by the Zacks model, companies holding a Zacks Rank #2 have high chances of outperforming the broader market in the quarters ahead.
Headquartered in Arlington, VA, CACI 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. The company’s solutions enhance defense and intelligence capabilities, assure homeland security, improve decision-making, and help customers operate smartly and efficiently.
CACI remains focused on the federal government marketplace and capturing more market share. The company 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 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.
Recently, the company was awarded a prime contract for five years, worth $140 by the U.S. Fleet Forces Command (USFFC) Naval Forces Logistics Support/Training Services to provide global logistics support services. The contract will enable the company strengthen its foothold in Logistics and Material Readiness market.
On the back of continuous contract wins, CACI outperformed the Zacks categorized Computer - Services industry with an average return of 22.2% compared with 1.8% for the latter, over a period of 90 days. In addition, over the same time frame, earnings estimates for the current year increased 0.3%. 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.
However, the government IT services arena consists of many competitors of various sizes. Its main competitors include CGI Group, Inc., SYNNEX Corporation, ManTech International Corporation and Sapient Corporation, all of whom are established players in the industry with their respective strengths. Consequently, CACI has to continuously invest in value drivers that act as a hedge against competition. These increase its operating costs and reduce its profitability.
Other Stocks to Consider
Some other favorably ranked stocks in the same space include CSG Systems (CSGS - Free Report) , Ebix Inc. and WidePoint Corporation (WYY - Free Report) . Ebix and CSG Systems both carry the same Zacks Rank as CACI, whereas WidePoint sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CSG Systems has beaten estimates in all the trailing four quarters with an average positive 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 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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CACI's Growth Prospects Bright on Government Contract Wins
On Dec 27, 2016, Zacks Investment Research upgraded CACI International Inc (CACI - Free Report) to a Zacks Rank #2 (Buy). Going by the Zacks model, companies holding a Zacks Rank #2 have high chances of outperforming the broader market in the quarters ahead.
Headquartered in Arlington, VA, CACI 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. The company’s solutions enhance defense and intelligence capabilities, assure homeland security, improve decision-making, and help customers operate smartly and efficiently.
CACI remains focused on the federal government marketplace and capturing more market share. The company 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 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.
Recently, the company was awarded a prime contract for five years, worth $140 by the U.S. Fleet Forces Command (USFFC) Naval Forces Logistics Support/Training Services to provide global logistics support services. The contract will enable the company strengthen its foothold in Logistics and Material Readiness market.
On the back of continuous contract wins, CACI outperformed the Zacks categorized Computer - Services industry with an average return of 22.2% compared with 1.8% for the latter, over a period of 90 days. In addition, over the same time frame, earnings estimates for the current year increased 0.3%. 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.
However, the government IT services arena consists of many competitors of various sizes. Its main competitors include CGI Group, Inc., SYNNEX Corporation, ManTech International Corporation and Sapient Corporation, all of whom are established players in the industry with their respective strengths. Consequently, CACI has to continuously invest in value drivers that act as a hedge against competition. These increase its operating costs and reduce its profitability.
Other Stocks to Consider
Some other favorably ranked stocks in the same space include CSG Systems (CSGS - Free Report) , Ebix Inc. and WidePoint Corporation (WYY - Free Report) . Ebix and CSG Systems both carry the same Zacks Rank as CACI, whereas WidePoint sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CSG Systems has beaten estimates in all the trailing four quarters with an average positive 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 surprise of 15%.
WidePoint has beaten estimates in all the trailing four quarters with an average positive earnings surprise of 37.5%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>