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Why Is CACI International (CACI) Up 3.6% 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 3.6% in that time frame, underperforming 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 catalysts.

CACI Beats on Q1 Earnings & Revenues, Reaffirms FY23 Guidance

CACI started fiscal 2023 on a strong note. Its first-quarter top and bottom lines surpassed the respective Zacks Consensus Estimate and improved on a year-over-year basis.

The national security-related IT solutions and services provider reported non-GAAP earnings of $4.36 per share, beating the Zacks Consensus Estimate of $4.22. Moreover, the bottom line increased 2.8% from the year-ago quarter’s figure of $4.24 per share. This increase in earnings was primarily driven by higher revenues and a lower tax rate, partially offset by higher interest expenses.

In the first quarter of fiscal 2023, CACI reported revenues of $1.61 billion, surpassing the Zacks Consensus Estimate of $1.59 billion. Moreover, the top line increased 7.7% from the prior-year quarter, primarily driven by acquisitions completed earlier this year and an increase of 4% in organic revenues.

Quarterly Details

In the first quarter, contract awards totaled $3.2 billion, with more than 80% for the new business. Revenues from contract awards excluded the ceiling value of multi-award, indefinite-delivery indefinite-quantity contracts.

CACI ended the quarter with a backlog of $24.9 billion, up 4% on a year-over-year basis. As of Sep 30, 2022, the funded backlog increased by 6% to $3.7 billion.

In terms of the customer mix, the Department of Defense contributed 68.2% to total revenues in the reported quarter. Federal Civilian Agencies made up 26.4%, while Commercial and other customers accounted for 5.4% of revenues.

Revenues generated as a prime contractor and a subcontractor accounted for 90.3% and 9.7% of total revenues, respectively.

In terms of contract type, cost-plus-fee-type contracts, fixed-price contracts, and time and material-type contracts contributed 58.2%, 30% and 11.8%, respectively, to total revenues.

Revenues generated as ‘Expertise’ and ‘Technology’ accounted for 45.7% and 54.3% of total revenues, respectively.

The operating income for the quarter amounted to $132.8 million, up 4.5% year over year. The operating margin contracted by 20 basis points (bps) to 8.3%. Adjusted EBITDA increased 5.7% year over year to $170 million. The adjusted EBITDA margin contracted by 20 bps to 10.6%.

Balance Sheet & Cash Flow

As of Sep 30, 2022, CACI had cash and cash equivalents of $136.6 million compared with the previous quarter’s $114.8 million. The total long-term (net of the current portion) debt was $1.6 billion, down from $1.7 billion as of Jun 30, 2022.

The company generated operating cash flow (excluding mini-automatic radar plotting aid or MARPA) of $142.9 million in the first quarter, declining by 18.1% from the year-ago quarter.

Free cash flow was $130.2 million during the quarter under review.

CACI Reaffirms 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?

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

VGM Scores

Currently, CACI International has a great Growth Score of A, 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 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 indicates a downward shift. 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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