CACI International CACI has been performing well, with its shares gaining 24.8% in 2024. Despite this surge, CACI underperformed the Zacks Computer and Technology sector’s 30.7% growth over the same period.

Although CACI has underperformed the broader sector, the company’s consistent contract wins and efforts to expand its market share through mergers and acquisitions underscore its potential for future growth. Its price performance is a testament to its market resilience and strategic focus.

CACI Gains From Steady Flow of Orders

Throughout 2024, CACI has received multiple contracts from federal agencies and Department of Defense in particular. These organizations include the National Geospatial-Intelligence Agency, U.S. Southern Command Operations, U.S. Central Command, U.S. Navy, U.S. Army, U.S. Space Command and even NASA.

CACI received several major deals with more than $1 billion budget. These include an eight-year-long contract valued at $2 billion, where CACI will deliver digital solutions technology to NASA. CACI received another contract worth $1.3 billion where it will deliver communications and IT expertise to the U.S. European Command and U.S. Africa Command.

CACI earned 95.1% and 94.8% of its total revenues from the contracts of the federal government. CACI International generated 74.4% and 71.9% of its total revenues in fiscal 2024 and 2023, respectively, from contracts with the Department of Defense. Having federal agencies as major clients stabilize CACI’s business and minimize revenue fluctuations. Moreover, these government projects, once sanctioned, generate revenues for several years, adding to the predictability of future revenue streams.

CACI also benefits from the higher spending as proposed in the latest federal government budget. The increased budget is expected to accelerate the pace of contract awards, which, in turn, will be beneficial for the top-line growth.

For fiscal 2025, CACI International anticipates revenues between $8.1 billion and $8.3 billion. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $8.4 billion, indicating year-over-year growth of 9.6%.

CACI expects its non-GAAP earnings per share in the range of $22.89-$23.78 for fiscal 2025.  The Zacks Consensus Estimate for fiscal 2025 earnings is pegged at $23.4, indicating year-over-year growth of 11%.

CACI Price Performance Chart

Image Source: Zacks Investment Research

CACI Expands Its Market Share Through Acquisitions

In 2024, CACI International acquired two companies to expand its expertise, gain market share and boost its top line. The two acquisitions include Azure Summit Technology and Applied Insights.

The acquisition of Azure Summit Technology brought a range of expertise onboard for CACI. This acquisition enhanced CACI’s offerings in intelligence, surveillance and reconnaissance, electronic warfare (EW) and signals intelligence.

The acquisition of Applied Insights has enabled CACI to enhance its cloud migration, adoption and transformation expertise. Moreover, Applied Insights' established relationships with the Department of Defense and Intelligence Communities were the icing on the cake for CACI.

Risks Persist for CACI

CACI International operates in a highly competitive defense, space, intelligence and mission-critical services market that comprises contenders, including Science Applications International SAIC, Leidos Holdings LDOS and KBR Inc. KBR.

CACI’s competitors, Science Applications International, KBR and Leidos are established players in the industry with their respective strengths. They contend with CACI through a competitive bidding process. These players also compete for a limited number of government contracts from the Department of Defense, the Department of Homeland Security and other U.S. government agencies, creating a highly competitive environment in this niche industry. This high competition causes pricing pressure leading to low-margin government deals affecting CACI’s profitability.

CACI International is also facing challenges from global slowdown concerns amid the ongoing macroeconomic and geopolitical tensions that might lead to softened spending by government agencies. The company’s near-term prospects are weighed down by these negative factors.

What Should Investors Do?

CACI International is gaining from a steady flow of long-term orders, especially from federal agencies that provide stability to its revenues. The company is also expanding its market share and expertise through acquisitions. However, intense competition and macroeconomic uncertainties remain possible headwinds for the company. Considering all these factors, investors should retain this Zacks rank #3 (Hold) stock at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

KBR, Inc. (KBR) : Free Stock Analysis Report

CACI International, Inc. (CACI) : Free Stock Analysis Report

Science Applications International Corporation (SAIC) : Free Stock Analysis Report

Leidos Holdings, Inc. (LDOS) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research