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CACI International (CACI) Up 4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for CACI International (CACI - Free Report) . Shares have added about 4% 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 catalysts.

CACI International Q4 Earnings & Revenues Beat Estimates

CACI International reported better-than-expected fourth-quarter fiscal 2024 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate.

The national security-related IT solutions and services provider reported non-GAAP earnings per share of $6.61, which surpassed the Zacks Consensus Estimate of $5.90. The bottom line also improved 24.7% on a year-over-year basis, primarily driven by increased revenues, higher operating income and lower share outstanding, partially offset by higher tax provisions and increased interest expenses.

In the fourth quarter of fiscal 2024, CACI International reported revenues of $2.04 billion, which beat the Zacks Consensus Estimate of $1.93 billion. The top line increased 19.7% from the prior-year quarter, primarily driven by organic growth.

Quarterly Details

In the fiscal fourth quarter, contract awards totaled $5.4 billion, with approximately 70% for the new business. Revenues from contract awards excluded the ceiling value of multi-award, indefinite-delivery indefinite-quantity contracts.

The company ended the quarter with a backlog of $31.6 billion, up 22% on a year-over-year basis. As of Jun 30, 2024, the funded backlog increased 3% to $3.8 billion. Our estimates for the total backlog and the funded backlog were pegged at $30.3 billion and $4.2 billion, respectively.

In terms of the customer mix, the Department of Defense contributed 75.2% to total revenues in the reported quarter. Federal Civilian Agencies made up 20.1%, while Commercial and other customers accounted for 4.7% of revenues. Our estimates for the Department of Defense, Federal Civilian Agencies, and Commercial and Other customers’ contributions toward total revenues were pegged at 74.1%, 20.9% and 5%, respectively.

The Prime Contractor and Subcontractor accounted for 89.4% and 10.6% of total revenues, respectively. Our model estimates for the Prime Contractor and Subcontractor’s contributions toward total revenues were pinned at 89.2% and 10.8%, respectively.

In terms of contract type, cost-plus-fee-type, fixed-price, and time and material-type contracts contributed 61%, 26.9% and 12.1%, respectively, to total revenues. Our model estimates for cost-plus-fee-type, fixed-price, and time and material-type contracts’ contributions toward total revenues were pegged at 60.4%, 27.2% and 12.3%, respectively.

Expertise and Technology accounted for 44.8% and 55.2% of total revenues, respectively. Our estimates for Expertise and Technology’s contributions toward total revenues were pegged at 47.1% and 52.9%, respectively.

The operating income for the quarter amounted to $197.8 million, up 32.9% year over year.  Moreover, the operating margin expanded 96 basis points (bps) to 9.7%.

Adjusted EBITDA increased 26.5% year over year to $234.9 million while adjusted EBITDA margin expanded 60 bps to 11.5%.

Balance Sheet & Cash Flow

As of Jun 30, 2024, CACI had cash and cash equivalents of $134 million compared with the previous quarter’s $159.2 million. The total long-term (net of the current portion) debt was $1.48 billion, which declined from $1.63 billion as of Mar 31, 2023.

The company generated operating cash flow (excluding mini-automatic radar plotting aid or MARPA) of $157.2 million in the fiscal fourth quarter, up 32.1% from the year-ago quarter. Free cash flow was $134.6 million during the quarter under review.

Updated Fiscal 2024 Guidance

CACI International projects fiscal 2025 revenues between $7.9 billion and $8.2 billion. It forecasts adjusted earnings per share between $22.44 and $23.33.

Free cash flow is estimated to be $425 for fiscal 2025. CACI expects adjusted net income in the range of $505-$525 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, CACI International has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 indicates a downward shift. Notably, CACI International has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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