Will CACI International (CACI) Disappoint on Q4 Earnings? - Analyst Blog


Technical service provider CACI International Inc. ( CACI ) is scheduled to report its fourth-quarter and fiscal 2014 results after the closing bell on Aug 20. In the last reported quarter, CACI recorded lackluster results with adjusted earnings missing the Zacks Consensus Estimate by a couple of cents. Let's see how things are shaping up for this announcement.

Key Factors in the Fourth Quarter

CACI expects reduced government spending and delays in contract awards to continue to adversely affect its soon-to-be-reported quarter and fiscal 2014 results. In April this year, CACI trimmed its revenue outlook for fiscal 2014 to a range of $3.5 billion and $3.6 billion from $3.6 billion-$3.8 billion. The lower fiscal revenue outlook was primarily driven by delayed accrual of new businesses, lower run-rates on professional services contracts and reductions in Afghanistan-related material purchases.

At the same time, CACI revised its net income outlook for fiscal 2014 to a range of $130-$140 million from $142-$152 million expected earlier. The fiscal earnings guidance was truncated to $5.12-$5.51 per share from the previous range of $5.59-$5.98. However, fourth quarter net income is expected to be higher sequentially, driven by higher award fees, greater contributions by Six3 Systems, increased volume of high margin product sales, modestly higher direct labor and lower interest expenses.  

The current Zacks Consensus Estimate for the ongoing quarter and fiscal 2014 are pegged at $1.43 and $5.33, respectively, representing a year-over-year decline of 8.3% and 16.2%. These reflect a negative investor perception about the growth prospects of the company. Consequently, CACI is susceptible to a further downgrade in the imminent future.

Earnings Whispers

Although, our proven model does not conclusively show that CACI is likely to miss earnings this quarter, the expectations are highly skewed in favor of a strong miss.

Zero Zacks ESP: Expected Surprise Prediction or Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%. This indicates a likely in line earnings for the shares.

Zacks Rank #5 (Strong Sell): CACI's Zacks Rank #5 tilts the predictive power of ESP in the negative direction. Note that stocks with Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings. The Sell-rated stocks (#4 and #5) should never be considered going into an earnings announcement.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Abercrombie & Fitch Co. ( ANF ), earnings ESP of +20.00% and Zacks Rank #2 (Buy).

MidWest One Financial Group, Inc. ( MOFG ), earnings ESP of +1.82% and Zacks Rank #2 (Buy).

Perry Ellis International Inc. ( PERY ), earnings ESP of +7.69% and Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ANF , PERY , CACI , MOFG



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