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CACI International (CACI) Up 21.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for CACI International (CACI - Free Report) . Shares have added about 21.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CACI International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CACI Q1 Earnings and Revenues Surpass Estimates, Up Y/Y
CACI International reported better-than-expected first-quarter fiscal 2021 (ended Sep 30, 2020) results. Quarterly earnings came in at $3.67 per share, beating the Zacks Consensus Estimate of $3.15 as well as up 38% year over year.
Revenues were $1.46 billion, up 7% from the year-ago quarter’s figure. This upside can be primarily attributed to new business wins, acquired contracts and on-contract growth. The company registered organic revenue growth of 6.1% in the fiscal first quarter. The top-line figure also outpaced the consensus mark of $1.45 billion.
Quarter Details
Contract awards in the reported quarter were worth $1.8 billion. Revenues from contract awards do not include ceiling values of multi-award, indefinite-delivery, indefinite-quantity contracts.
Total backlog, as of Sep 30, 2020, was $21.9 billion, up 12.3% higher than the prior-year quarter’s level. Funded backlog at the end of September was $3.4 billion, up 4%.
In terms of customer mix, the Department of Defense contributed 68.8% to total revenues in the reported quarter. Federal Civilian Agencies contributed 26.7%, while Commercial and other customers accounted for 4.5% of revenues.
Revenues generated as a prime contractor and a subcontractor accounted for 90.9% and 9.1% of total revenues, respectively.
In terms of contract type, cost reimbursable type contracts contributed 56.5%, fixed-price contracts contributed 29.7%, and time and material type contracts contributed 13.8% to total revenues.
Margins
Operating income for the fiscal first quarter came in at $134.4 million, up 34.2% from the year-ago quarter’s level. This upswing resulted from higher revenues, as well as lower indirect costs and selling expenses. Operating income margin expanded 190 basis points (bps) to 9.2%.
Adjusted EBITDA for the fiscal first quarter increased 28.9% year over year to $165.4 million. Adjusted EBITDA margin of 11.3% advanced 190 bps.
Balance Sheet and Cash Flow
At the end of the fiscal first quarter, CACI International had cash and cash equivalents of $124.9 million compared with the previous quarter’s $107.2 million.
Total long-term (net of current portion) debt was $1.57 billion.
Cash flow from operations during the fiscal first quarter summed $176.9 million, aided by growth in net income combined with lower DSO (Days Sales Outstanding).
Guidance
CACI International raised its outlook for fiscal 2021. Revenues are now expected in the range of $6.05-$6.25 billion, up from the previous forecast of $6-$6.2 billion. Earnings per share are now estimated between $14.47 and $15.25, up from the earlier expectation of $13.50-$14.28.
The company raised the net income guidance range to $372-$392 million from $347-$367 million. Moreover, net cash provided by operating activities is now anticipated to be at least $600 million instead of the previous projection of at least $580 million.
The company continues to expect solid organic revenue growth and continued margin expansion throughout 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, CACI International has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CACI International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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CACI International (CACI) Up 21.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for CACI International (CACI - Free Report) . Shares have added about 21.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CACI International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CACI Q1 Earnings and Revenues Surpass Estimates, Up Y/Y
CACI International reported better-than-expected first-quarter fiscal 2021 (ended Sep 30, 2020) results. Quarterly earnings came in at $3.67 per share, beating the Zacks Consensus Estimate of $3.15 as well as up 38% year over year.
Revenues were $1.46 billion, up 7% from the year-ago quarter’s figure. This upside can be primarily attributed to new business wins, acquired contracts and on-contract growth. The company registered organic revenue growth of 6.1% in the fiscal first quarter. The top-line figure also outpaced the consensus mark of $1.45 billion.
Quarter Details
Contract awards in the reported quarter were worth $1.8 billion. Revenues from contract awards do not include ceiling values of multi-award, indefinite-delivery, indefinite-quantity contracts.
Total backlog, as of Sep 30, 2020, was $21.9 billion, up 12.3% higher than the prior-year quarter’s level. Funded backlog at the end of September was $3.4 billion, up 4%.
In terms of customer mix, the Department of Defense contributed 68.8% to total revenues in the reported quarter. Federal Civilian Agencies contributed 26.7%, while Commercial and other customers accounted for 4.5% of revenues.
Revenues generated as a prime contractor and a subcontractor accounted for 90.9% and 9.1% of total revenues, respectively.
In terms of contract type, cost reimbursable type contracts contributed 56.5%, fixed-price contracts contributed 29.7%, and time and material type contracts contributed 13.8% to total revenues.
Margins
Operating income for the fiscal first quarter came in at $134.4 million, up 34.2% from the year-ago quarter’s level. This upswing resulted from higher revenues, as well as lower indirect costs and selling expenses. Operating income margin expanded 190 basis points (bps) to 9.2%.
Adjusted EBITDA for the fiscal first quarter increased 28.9% year over year to $165.4 million. Adjusted EBITDA margin of 11.3% advanced 190 bps.
Balance Sheet and Cash Flow
At the end of the fiscal first quarter, CACI International had cash and cash equivalents of $124.9 million compared with the previous quarter’s $107.2 million.
Total long-term (net of current portion) debt was $1.57 billion.
Cash flow from operations during the fiscal first quarter summed $176.9 million, aided by growth in net income combined with lower DSO (Days Sales Outstanding).
Guidance
CACI International raised its outlook for fiscal 2021. Revenues are now expected in the range of $6.05-$6.25 billion, up from the previous forecast of $6-$6.2 billion. Earnings per share are now estimated between $14.47 and $15.25, up from the earlier expectation of $13.50-$14.28.
The company raised the net income guidance range to $372-$392 million from $347-$367 million. Moreover, net cash provided by operating activities is now anticipated to be at least $600 million instead of the previous projection of at least $580 million.
The company continues to expect solid organic revenue growth and continued margin expansion throughout 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, CACI International has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CACI International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.