2024-04-02 20:38:39 ET
Summary
- CACI’s revenue has grown impressively (+8% CAGR), owing to strong Government demand and a transition to Technology offerings, exploiting this trend.
- We expect Government spending to continue, as will the technology trend, positioning CACI well to generate consistent growth going forward.
- Supplementing this is M&A, which Management has used to increase its expertise and service offering, as well as to grow the business.
- Despite the development, CACI is underperforming its peers, particularly in its margins (FCF and EBITDA). This is weighing on its relative long-term trajectory.
- While CACI’s valuation appears reasonable, we do not see upside until its FCF margin expands.
Introduction and thesis
CACI International Inc. ( CACI ) is an American multinational professional services and information technology company headquartered in Arlington, Virginia. Founded in 1962, CACI provides a wide range of services to government agencies, defense contractors, and commercial clients, including cybersecurity, information technology solutions, intelligence services, and consulting.
CACI is a high-quality business, operating in a lucrative industry segment. The company operates within the Venn diagram of IT solutions, which have grown rapidly during the last two decades, and Government contracts, which are broadly sticky in demand and gradually grow in monetary size....
Read the full article on Seeking Alpha
For further details see:
CACI International: Quality business Model Evolution But More Progress Required