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CACI International (CACI) Down 4.5% Since Earnings Report: Can It Rebound?

CACI

Trades from $3

A month has gone by since the last earnings report for CACI International, Inc. (CACI - Free Report) . Shares have lost about 4.5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? 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 International Beats Q2 Earnings, Guides Up

CACI International reported strong second-quarter fiscal 2017 results with healthy year-over-year increase in both earnings and revenues. The company benefited from increased material purchases, accelerated contract modifications, and admirable contract performance.

GAAP earnings for the reported quarter were $42.4 million or $1.69 per share compared with $30.5 million or $1.23 per share in the prior-year quarter. GAAP earnings per share comprehensively beat the Zacks Consensus Estimate of $1.42. The year-over-year increase in earnings was primarily driven by a significant improvement in revenues.

On adjusted basis, second-quarter fiscal 2017 earnings were $2.30 per share, up from $1.72 in the year-earlier quarter.

Quarterly revenues were $1,057.5 million compared with $830.4 million in the year-ago quarter, driven primarily by revenues of $260 million from the National Security Solutions (NSS) acquisition. The reported revenues exceeded the Zacks Consensus Estimate of $1,025 million.

Other Significant Details

Contract awards in the reported quarter were $1.6 billion, of which approximately 85% accounted for new businesses for CACI International. Contract funding orders were $752 million in the quarter. Total backlog as of Dec 31, 2016 was $11.6 billion with a funded backlog of $2 billion.

In terms of customer mix, the Department of Defense accounted for about 64.8% of the total revenue in the reported quarter. Federal Civilian Agencies contributed about 29.1%, while Commercial and other customers accounted for 6.1% of revenues.

Balance Sheet and Cash Flow

At quarter end, CACI International had cash and cash equivalents of $72.7 million with long-term debt (net of current portion) of $1,292.3 million.

Net cash from operations for the first six months of fiscal 2017 was $135.4 million compared with $135.6 million in the year-ago period.

Guidance Raised

CACI International raised its earlier guidance for fiscal 2017 on improved growth dynamics. Revenues are expected in the range of $4,150–$4,300 million (earlier expectation was $4,050 million–$4,250 million). Net income is expected in the range of $155–$162 million (earlier expected range was $150 million–$160 million), resulting in earnings per share of $6.18–$6.45 (earlier expectation was $5.98–$6.37).

Moving ahead, CACI International expects to diligently focus on its operating plans to reward shareholders with attractive risk-adjusted returns. The company remains confident about its competitive position and continued ability to meet customer requirements through the delivery of innovative, affordable solutions and services.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter.

VGM Scores

At this time, CACI International's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 20% 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.

Based on our scores, the stock is suitable for value and growth investors.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. Notably, the stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.





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