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CACI's U.S. Army Reserve Contract

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Winning new contracts continues to further enhance CACI International Inc.‘s (CACI - Free Report) business as it recently announced the receipt of a three-year task order contract (base period of one year and option period of two years) worth $31 million. Awarded by the U.S. Army Reserve Command, this contract pertains to providing various simulation and training support solutions to the Mission Command Training Support (MCTS) program.

The contract is awarded against the OPTARSS II (Operations, Planning, Training and Resource Support Services) contract vehicle. With the agreement, the company will be able to extend its coverage in the training and operations platform and strengthen its foothold in the command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR) market.

Under the program, the company along with the Army Mission Command systems will be engaged in integrating live, virtual, and constructive simulations and providing its commanders effective situational control. Services in the contract also entail pre- and post-mobilization training support services and combining CACI’s services with U.S. Army Reserve Command’s digital processes, networks and infrastructure to further enhance its battle simulations.

Management stated that, CACI has successfully delivered modeling and simulation support services to the Department of Defense and U.S. forces during the past 50 years and it is considered as an expert in providing mission-oriented training solutions. CACI International’s relationship with U.S. Army Reserve Command is expected to prove extremely effective for the company’s training solutions and it is also likely to raise the productivity and efficacy for U.S. Army Reserve Command.

CACI International has a large project pipeline of new deals and continues to win more deals at regular intervals. Very recently, CACI International announced securing a prime position in the Global Tactical Advanced Communications Systems (GTACS) contract worth $10 billion. Awarded by the U.S. Army, this contract pertains to providing various services including building up, promotion and maintenance of turnkey telecommunications support solutions to the Army’s Program Executive Office Command, Control and Communications-Tactical (PEO C3T).

However, the company needs to be wary of its formidable competitors who include big names such as CGI Group, Inc. (GIB - Free Report) and ManTech International Corporation (MANT - Free Report) . CGI Group recently received a seven-year contract worth $142 million from John Hancock Financial Services. Per the contract, CGI Group will be supporting John Hancock's data centers for improving its functionality and it will be also providing Infrastructure as a service (IaaS) to enhance John Hancock's business. Hence, the company should not become complacent with its contract win spree.

The current Zacks Consensus Estimates for CACI International Inc. are $1.64 and $6.60 per share for the second quarter of fiscal 2013 and fiscal 2013 (ending June 30, 2013), respectively. The estimates represent a year-over-year growth of 8.7% for the second quarter and 11.1% for fiscal 2013. At present, we have a ‘Neutral’ recommendation on CACI International Inc. The stock currently carries a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

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