We retain our Neutral recommendation on
CACI International Inc.
(
CACI
).
A solid second quarter of fiscal 2012 brought forth revenues of
$973.2 million, increasing around 12% year over year while earnings
came in at $1.51 per share. This easily surpassed the Zacks
Consensus Estimate of $1.39 per share.
The strong sales along with the approbatory contract wins were
the highlights of the quarter, which bolstered the revenues so
comprehensively. There were a number of buy-back activities that
the company ventured into which ameliorated overall earnings.
Cyber solutions are gaining considerable importance in today's
world due to the pervasive nature of ongoing cyber threats and
attacks. Hence, the future prospects of CACI International look
quite favorable, judging by the recent IT security scenario.
Making strategic acquisitions is also a regular key for
profitability when it comes to CACI International. The company last
acquired Oracle solutions provider Advanced Programs, LLC, which
made the company even more formidable to attract government
contracts.
CACI International caters primarily to the U.S. Government and
its various agencies which have immense faith in the reputation of
the company, awarding it with long-term multi-million dollar
contracts interminably. The Department of Defense is one of the
major customers of CACI International due to its system integration
skills and intelligence expertise which bolster information sharing
effectively among all intelligence agencies.
However, whilst government contracts give a sense of assurance,
security and long-term profitability, it also makes the company
vulnerably exposed to macro fluctuations. These include budget
cuts, economic downturns, change in expenditure preferences
etc.
In the last quarter, the Department of Defense accounted for
about 79% whereas Federal Civilian Agencies accounted for around
16.3% of total revenue for the company. A budget cut is expected
from the U.S. Congress Government in 2013 and this might create
quite a precarious condition for CACI International owing to the
fact that the company still largely relies on these government
contracts.
The top-line segments have under-performed of late which might
pose to be quite an onus while we look into the future.
Furthermore, the company has a series of ominous competitors in the
industry to grapple with including
Synnex Corp.
(
SNX
),
iGate Corp.
(
IGTE
) and
Ebix, Inc.
(
EBIX
); all of which have gained eminence for their progressive
trends.
Therefore, we find it wise to maintain a sideline view on the
company's stock, thereby retaining our Neutral recommendation.
CACI INTL A (
CACI
): Free Stock Analysis Report
EBIX INC (
EBIX
): Free Stock Analysis Report
IGATE CORP (
IGTE
): Free Stock Analysis Report
SYNNEX CORP (
SNX
): Free Stock Analysis Report
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