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Why Is CACI International (CACI) Up 0.2% Since Last Earnings Report?

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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 0.2% 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 the most recent earnings report in order to get a better handle on the important drivers.

CACI Surpasses Earnings Estimates, Misses Revenues in Q4

CACI International reported mixed results for the fourth quarter of fiscal 2022, wherein earnings topped the Zacks Consensus Estimate, while revenues fell short of the same. The national security-related IT solutions and services provider reported non-GAAP earnings of $4.54 per share, beating the Zacks Consensus Estimate by a penny.

However, the bottom line declined by 27.5% from the year-ago quarter’s figure of $6.26 per share. This decline in earnings was primarily due to the higher tax rate compared with the year-ago quarter.

In the fourth quarter of fiscal 2022, CACI reported revenues of $1.64 billion, missing the Zacks Consensus Estimate of $1.66 billion. However, the top line increased 5% from the prior-year quarter, primarily driven by acquisitions completed earlier this year and an increase of 2% in organic revenues.

Quarterly Details

In the fourth quarter, contract awards totaled $1.5 billion, with approximately 70% for the new business. Revenues from contract awards excluded the ceiling values of multi-award, indefinite-delivery indefinite-quantity contracts.

CACI ended the quarter with a backlog of $23.3 billion, down 4% on a year-over-year basis. As of Jun 30, 2022, the funded backlog decreased by 3% to $3.2 billion.

In terms of customer mix, the Department of Defense contributed 71.6% to total revenues in the reported quarter. Federal Civilian Agencies made up 23.3%, while Commercial and other customers accounted for 5.1% of revenues.

Revenues generated as a prime contractor and a subcontractor accounted for 89.4% and 10.6% of total revenues, respectively.

In terms of contract type, cost-plus-fee type contracts, fixed-price contracts and time and material type contracts contributed 58.4%, 29.2% and 12.4%, respectively, to total revenues.Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 46.5% and 53.5% of total revenues, respectively.

The operating income for the quarter amounted to $119.8 million, up 6.9% year over year. The operating margin expanded by 10 basis points (bps) to 7.3%. Adjusted EBITDA increased 8.4% year over year to $157.1 million. The adjusted EBITDA margin expanded by 30 bps to 9.6%.

Balance Sheet & Cash Flow

As of Jun 30, 2022, CACI had cash and cash equivalents of $114.8 million compared with the previous quarter’s $125.1 million. The total long-term (net of the current portion) debt was $1.7 billion, down from $1.82 billion as of Mar 31, 2022.

The company generated operating cash flow (excluding mini-automatic radar plotting aid or MARPA) of $152.4 million in the fourth quarter, improving by 53% from the year-ago quarter. During fiscal 2022, CACI generated $769.8 million of operating cash flow (excluding MARPA).

Free cash flow was $116.6 million during the quarter under review and $695.2 million in fiscal 2022.

Fiscal 2023 Guidance

CACI projects revenues between $6.475 billion and $6.675 billion in fiscal 2023. Adjusted earnings are projected in the range of $17.65-$18.49 per share.

The company expects the fiscal 2023 adjusted net income in the range of $420-440 million. It estimates free cash flow of at least $415 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -7.55% due to these changes.

VGM Scores

Currently, CACI International has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. 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 indicates a downward shift. It's no surprise CACI International has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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