It has been about a month since the last earnings report for ICF International (ICFI Quick QuoteICFI - Free Report) . Shares have lost about 8.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ICF due for a breakout? 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 drivers.

ICF International Reports Q3 Earnings Beat

ICF International delivered impressive third-quarter 2021 results, with earnings and revenues beating the Zacks Consensus Estimate.

Non-GAAP earnings (excluding 25 cents from non-recurring items) of $1.32 per share surpassed the Zacks Consensus Estimate by 18.9% and increased 20% on a year-over-year basis. Revenues of $394.1 million surpassed the consensus mark by 2.4% and increased 9.4% year over year, owing to a 4% year-over-year increase in service revenues.

Revenues in Detail

Revenues from government clients came in at $285.9 million, up 16.1% on a year-over-year basis. The U.S. federal government revenues of $195.1 million increased 11.4% year over year and contributed 49% to total revenues.  The U.S. state and local government revenues of $58.5 million moved up 15.1% year over year and contributed 15% to total revenues.

International government revenues of $32.2 million were up 59.4% year over year, contributing 8% to total revenues. This surge was driven by significant pass-through revenues.

Commercial revenues totaled $108.2 million, down 5.3% from the year-ago quarter’s figure and contributed 28% of total revenues. Energy markets and marketing services contributed 57% and 32%, respectively, to commercial revenues.

Backlog and Value of Contracts

Total backlog and funded backlog amounted to $3.1 billion and $1.7 billion at the end of the quarter, respectively. The total value of contracts awarded in the quarter came in at $604 million, for a quarterly book-to-bill ratio of 1.53.

Operational Results

Adjusted EBITDA of $43.8 million increased 16% from the year-ago quarter’s figure. Adjusted EBITDA margin on revenues of 11.1% increased 60 basis points (bps) year over year. Adjusted EBITDA margin on service revenues was 15.9%, up 160 bps year over year.

Balance Sheet

ICF exited the third quarter with cash and cash equivalent balance of $7.88 million compared with $9.6 million recorded at the end of the previous quarter. The company had a long-term debt of $269.7 million compared with $321.7 million at the end of the prior quarter. The company generated around $58.4 million of cash from operating activities and capex was $4.8 million. ICF paid out dividends of $2.6 million in the quarter.

2021 Guidance

ICF International raised its guidance for non-GAAP earnings per share to $4.70-$4.90 from the previously expected $4.35-$4.65.Revenues are still projected in the range of $1.525-$1.575 billion.EBITDA is expected in the high-end of the range of $145-$155 million or slightly above.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

At this time, ICF has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second 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 broadly trending downward for the stock, and the magnitude of these revisions has been net zero. Notably, ICF has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.