CACI International Inc (CACI - Free Report) recently was awarded a contract worth $94 million by the U.S. Air Force 309th Electronics Maintenance Group. The contract spans over a period of five years.
Per the deal, the company will provide automated testing system support services to the U.S. Air Force 309th Electronics Maintenance Group under the Automated Test System Sustainment Initiative (ATSSI). CACI has delivered over 130 common test systems to the U.S. Air Force. The company intends to provide complete development and testing of network communications to ensure efficiency and high reliability for aircraft readiness.
This division of the U.S. Air Force repairs, overhauls and modifies various aircraft systems and components, and supports programmed depot maintenance and modification of aircraft weapon systems.
Per the ATSSI contract, CACI will offer testing support services which include integrating, upgrading, and consolidating computer-based analytical software tools, database repositories, test fixtures, test program sets, and associated network communications for aircraft.
CACI continues to win deals at regular intervals. These back-to-back contracts will boost the company’s growth trajectory. It intends to drive operational excellence by focusing on its organic and inorganic growth strategy and strengthening existing customer relationships while building new ones.
Recently the company secured a $40 million contract from the Naval Sea Systems Command (NAVSEA). Per the five-year SeaPort-e contract vehicle, CACI will be providing new services in the Logistics and Material Readiness market. The contract spans over a period of five years. Per this contract, CACI will offer professional, technical, and consulting support to NAVSEA. In order to deliver this support, the company will leverage its extensive experience in providing logistics and material readiness solutions for the smooth functioning of the NAVSEA system.
Despite constant contract wins, the company has significantly underperformed the Zacks categorized Computer - Services industry with a decline of 1.8% as against 1.1% gain for the latter, over the last 90 days.
A leader in IT outsourcing for the U.S. federal government, CACI earns its revenues through four customer groups: The Department of Defense (DoD), Federal Civilian Agencies, Commercial and Other, and State and Local Governments. The company’s DoD customers include the U.S. Army (the largest customer) and the Navy. Meanwhile, federal civilian agencies provide litigation support services to the Department of Justice.
Having the government as one of the biggest clients lends stability to the business and mitigates some of the fluctuations in revenues. Although the government generally has a lengthy approval process, the project continues to earn money years after securing approval. Moreover, government contracts improve the visibility on future revenue streams.
CACI currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Hitachi, Ltd. (HTHIY - Free Report) , Publicis Groupe S.A. (PUBGY - Free Report) and NCI, Inc. . Publicis Groupe and NCI carry a Zacks Rank #2 (Buy) while Hitachi sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hitachi is currently trading at a forward P/E of 11.4x. It has a long-term earnings growth expectation of 13%.
Publicis Groupe has a long-term earnings growth expectation of 9.51%. It is currently trading at a forward P/E of 14.1x.
NCI has a long-term earnings growth expectation of 5%. It is currently trading at a forward P/E of 19.9x.
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