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CACI International Rides High on Solid Q4, Expanding TAM

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On Aug 17, CACI International Inc. (CACI - Free Report) was upgraded to a Zacks Rank #1 (Strong Buy). The upgrade can be attributed to a solid fourth-quarter fiscal 2018 results.

Moreover, CACI’s recent acquisition of the Systems Engineering and Acquisition Support Services Business Unit of CSRA LLC, which was completed a couple of days after it reported fiscal fourth-quarter results, is a tailwind. The acquisition led management to raise fiscal 2019 guidance.

In the last reported quarter, adjusted earnings per share of $1.84 surpassed the Zacks Consensus Estimate of $1.78. We note that CACI International beat the Zacks Consensus Estimate in the trailing four quarters with an average positive surprise of 19.11%.

Revenues of $1.17 billion were 2.9% higher than the year-ago figure driven by new business wins and strong performance in existing work.

We also note that CACI International has outperformed the industry on a year-to-date basis. While the stock has returned 43.1%, the industry rallied 7.1%.

 



Growth Catalysts

CACI International has a large pipeline of new projects and continues to win deals at regular intervals. These back-to-back contract wins are the key catalysts driving success perennially for the company. Furthermore, having the government as a big client lends stability to the business and moderates fluctuations in revenues.

CACI International has been doing very well with a record level of awards, which reflects its disciplined business development actions, consistent operational excellence and high customer satisfaction. Going forward, the company continues to execute its strategy of winning high-value contracts, delivering excellence to its customers and deploying its capital for growth.

Moreover, the company was named the premier consulting partner in the Amazon Web Services Partner Network, and was also awarded another ISO 20,000 certification, strengthening its position of trust internationally.

Furthermore, its robust investments associated with the expansion of Agile Solution Factory are expected to boost its business further.

CACI International’s continued focus on the federal government marketplace and efforts to increase market share is commendable. The company is driving operational excellence by intensively focusing on organic and inorganic growth strategies and strengthening its existing customer relationships while building newer ones.

The company’s recent buyout of the support services business of CSRA LLC is expected to be significantly accretive to its revenues going forward. The $84 million deal, which prompted a raise in fiscal 2019 guidance, is expected to rake in an additional $150 million through the fiscal. The earlier full-fiscal projected revenue range of $4.55 billion to $4.75 billion was raised to $4.7-$4.9 billion.

CACI now anticipates fiscal 2019 earnings to be in the range of $9.14 to $9.53 per share, up from prior guidance of $8.98 to $9.38.

Other Key Picks

Virtusa Corporation , Qualys, Inc. (QLYS - Free Report) and Fortinet, Inc. (FTNT - Free Report) are other top-ranked stocks in the broader Computer and Technology sector, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Virtusa, Qualys and Fortinet is projected to be 20%, 8% and 16.8%, respectively.

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