On Aug 26, Zacks Investment Research upgraded technical service provider CACI International Inc. (CACI) to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell) largely due to relatively modest fourth-quarter fiscal 2014 results and a steady fiscal 2015 outlook. The stock is currently trading at a forward P/E of 13.3x and has long-term earnings growth expectation of 10.0%.
Why the Upgrade?
With a focused market-driven strategy, diligent execution of operational plans and strategic capital deployment for inorganic growth, CACI International reported adjusted earnings (with employee stock option adjustments) of $1.51 per share in the reported quarter that comfortably beat the Zacks Consensus Estimate by 8 cents.
Contract awards for the reported quarter improved 24.4% year over year to $698 million, bringing the tally for fiscal 2014 to $3.95 billion – about 14.7% higher than the $3.44 billion of awards received in fiscal 2013. Contract funding orders aggregated $906.8 million in the quarter and were up 25.7% year over year.
For fiscal 2014, contract funding orders increased 5.7% year over year to $3.6 billion. This brought the total backlog tally to $7.1 billion as of Jun 30, 2014 with a funded backlog of $1.6 billion.
Operating income stood at $69.2 million in the reported quarter versus $67.9 million in the year-ago quarter. The year-over-year increase in operating income was primarily due to higher gross profit, partially offset by amortization expenses related to the Six3 Systems acquisition. Earnings before interest, taxes, depreciation and amortization (EBITDA) improved to $87.5 million from $81.9 million in the year-ago quarter.
For fiscal 2015, CACI International reiterated its previous guidance. The company expects to focus on its operating plans to reward its shareholders with attractive risk-adjusted returns. The company also remains on track to fully integrate Six3 Systems to achieve at least 5% accretion to GAAP earnings per share and 10% on an adjusted basis.
CACI International intends to drive operational excellence by focusing on its organic and inorganic growth strategies and strengthening its existing customer relationships while building newer ones. All these offer an exciting growth potential for CACI International. The solid fundamentals also find confirmation in positive estimate changes, driving the Zacks Consensus Estimate higher for the current fiscal. The Zacks Consensus Estimates for the ongoing fiscal is currently pegged at $5.35.
Other Stocks to Consider
Stocks that look promising and are worth considering in the industry include Syntel, Inc. (SYNT), Carbonite, Inc. (CARB) and NCI, Inc. (NCIT), each carrying a Zacks Rank #2 (Buy).
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
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment