CACI International IncCACI recently was awarded a task order worth $40 million by the Naval Sea Systems Command (NAVSEA). Per the five-year SeaPort-e contract vehicle, CACI will be providing new services in the Logistics and Material Readiness market. The contract spans over a period of five years.
NAVSEA is the largest of the Navy's five system commands with a force of 31,000 civilian, military and contract support personnel. It comprises command staff, headquarters directorates, affiliated Program Executive Offices along with numerous field activities responsible for engineering, building, buying, maintaining and modernizing the U.S. Navy fleet.
Per this contract, CACI will offer professional, technical, and consulting support to NAVSEA. In order to deliver this support, the company will leverage its extensive experience in providing logistics and material readiness solutions for the smooth functioning of the NAVSEA system.
Recently the company secured a $21 million task order from the Space and Naval Warfare Systems Center (SSC) Atlantic. The contract spans over a period of two years. Per the deal, the company will offer cyber security systems support to the Naval Facilities Engineering Command to augment security of industrial control systems, important to the country's critical infrastructure.Over the years, CACI has worked closely with the Navy, helping it achieve its missions with its expertise in delivering mission-critical logistics solutions.
CACI continues to win deals at regular intervals. These back-to-back contracts will boost the company's growth trajectory. It intends to drive operational excellence by focusing on its organic and inorganic growth strategy and strengthening existing customer relationships while building new ones.
CACI, however, significantly underperformed the Zacks categorized Computer - Services industry with a decline of 0.4% compared with 4.4% gain for the latter, over the last 90 days.
A leader in IT outsourcing for the U.S. federal government, CACI earns its revenues through four customer groups: the Department of Defence (DoD), Federal Civilian Agencies, Commercial and Other, and State and Local Governments. The company's DoD customers include the U.S. Army (the largest customer) and the Navy. Meanwhile, federal civilian agencies provide litigation support services to the Department of Justice.
Having the government as one of the biggest clients lends stability to the business and mitigates some of the fluctuations in revenues. Although the government generally has a lengthy approval process, the project continues to earn money years after securing approval. Moreover, government contracts improve the visibility on future revenue streams.
In addition, CACI has ample exposure to the rapidly growing DoD and Department of Homeland Security budgets. The company's system integration skills and intelligence expertise allow it to consume a significant portion of the funds earmarked for the Department of Homeland Security, while creating systems that foster the sharing of critical information among all intelligence agencies. Given these factors, we believe that CACI is rather comfortably positioned, especially with its favored relationship with the DoD.
CACI currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Hitachi, Ltd. HTHIY , Publicis Groupe S.A. PUBGY and NCI, Inc. NCIT . Publicis Groupe and NCI,carry a Zacks Rank #2 (Buy), while Hitachi sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Hitachi is currently trading at a forward P/E of 11.5x. It has a long-term earnings growth expectation of 13%.
Publicis Groupe has a long-term earnings growth expectation of 9.51%. It is currently trading at a forward P/E of 14.3x.
NCI has a long-term earnings growth expectation of 5%. It is currently trading at a forward P/E of 19.4x.
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