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CACI International (CACI) Up 3.1% Since Last Earnings Report: Can It Continue?

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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 3.1% 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 its most recent earnings report in order to get a better handle on the important drivers.

CACI International Q4 Earnings Rise YY

CACI International reported solid fourth-quarter fiscal 2018 results with healthy year-over-year increase in both earnings and revenues. The company benefited from organic revenue growth and expanding margins.

The company reported diluted earnings of $2.05 per share. Excluding the tax impact, earnings for the reported quarter were $1.84 per share compared with $1.16 in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of $1.78.

Quarterly revenues were $1.170 billion compared with $1.137 billion in the year-ago quarter. The 2.9% revenue rise was primarily attributable to new business wins and on-contract growth, which aided organic growth. However, the reported revenues missed the Zacks Consensus Estimate of $1.174 billion.

For fiscal 2018, revenues were $4.467 billion compared with $4.354 billion a year ago.

Other Significant Details

Contract awards in the reported quarter were worth $1.5 billion, of which approximately 70% came from new businesses. Contract funding orders were $1.4 billion, up 35% year over year. Total backlog as of Jun 30, 2018 was $11.3 billion. Funded backlog at June end was $2.1 billion.

In terms of customer mix, the Department of Defense accounted for about 67.8% of total revenues in the reported quarter. Federal Civilian Agencies contributed about 25.6% while Commercial and other customers accounted for 6.6% of revenues.

Operating income for the quarter came in at $80.3 million with a 0.3% increase from the year-ago quarter. This metric came in at $340.7 million for full-fiscal 2018, up 14.6% year over year. Improved program execution, higher profits from existing and new businesses, and one-time incentive fees contributed to the higher operating income. This, however, was offset by Shared Service Center investments and higher compensation as incentives.

Operating margin fell 10 basis points (bps) to 6.9% in the quarter. However, operating margin was 7.6%, up 80 bps for the full fiscal, exceeding the expected increase of 10-30 bps.

Adjusted EBITDA for the fiscal fourth quarter increased 3.3% from the year-ago quarter to $100.6  Adjusted EBITDA margin of 8.6% remained flat on a year-over-year basis.

Balance Sheet and Cash Flow

At quarter end, CACI International had cash and cash equivalents of $66.2 million compared with $55.9 million in the previous quarter.

Long-term debt (net of current portion) was reported to be $1,015.4 million.

Net cash from operations for the full fiscal was $325.1 million compared with $281.3 million a year ago.

Guidance

The company’s recent buyout of the support services business of CSRA LLC is expected to be significantly accretive to its revenues going forward. The $84 million deal, which prompted a raise in fiscal 2019 guidance, is expected to rake in an additional $150 million through the fiscal. The company raised its earlier full-fiscal projected revenue range of $4.55-$4.75 billion to $4.7-$4.9 billion.

CACI now anticipates fiscal 2019 earnings to be in the range of $9.14 to $9.53 per share, up from prior guidance of $8.98 to $9.38.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, CACI International has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 looks promising. Notably, CACI International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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