Intrinsic Value CACI International Inc (CACI)

• Previous Close: $495.96
• Intrinsic Value: n/a
• Upside potential: n/a%

Stock Valuation Context

Business Model And Market Position

CACI International Inc operates as a leading provider of expertise and technology solutions to U.S. federal government agencies, primarily in defense, intelligence, and homeland security sectors. The company specializes in advanced IT services, cybersecurity, cloud computing, and mission support, leveraging its deep domain knowledge to deliver mission-critical solutions. CACI’s revenue model is driven by long-term government contracts, often structured as cost-plus, fixed-price, or time-and-materials agreements, ensuring stable cash flows. The firm competes in a highly specialized market, differentiated by its technical expertise, security clearances, and ability to integrate complex systems. Its positioning as a trusted partner to federal agencies allows it to secure high-value contracts, particularly in classified and sensitive programs. The company’s focus on innovation, such as AI and data analytics, further strengthens its competitive edge in a sector where technological superiority is paramount.

Revenue Profitability And Efficiency

CACI reported $7.66 billion in revenue for FY 2024, with net income of $419.9 million, reflecting a net margin of approximately 5.5%. Diluted EPS stood at $18.60, demonstrating steady profitability. Operating cash flow was $497.3 million, though capital expenditures of $63.7 million reduced free cash flow. The company’s efficiency metrics suggest disciplined cost management, typical of government contractors with structured pricing models.

Earnings Power And Capital Efficiency

The company’s earnings power is underpinned by its high-value government contracts, which provide recurring revenue streams. CACI’s capital efficiency is evident in its ability to generate substantial operating cash flow relative to its capital expenditures. The absence of dividends suggests reinvestment in growth initiatives, such as acquisitions or R&D, to sustain its competitive positioning in the federal IT and defense markets.

Balance Sheet And Financial Health

CACI’s balance sheet shows $134.0 million in cash and equivalents against $1.92 billion in total debt, indicating moderate leverage. The debt level is manageable given the company’s stable cash flows from government contracts. The firm’s financial health appears robust, with sufficient liquidity to meet obligations and invest in strategic opportunities, though further debt reduction could improve flexibility.

Growth Trends And Dividend Policy

Growth is driven by federal budget allocations to defense and IT modernization, with CACI well-positioned to capitalize on these trends. The company does not pay dividends, opting instead to reinvest in organic growth and strategic acquisitions. This aligns with its focus on expanding capabilities and securing larger, multi-year contracts in high-priority government sectors.

Valuation And Market Expectations

CACI’s valuation reflects its status as a reliable government contractor with predictable earnings. The market likely prices in continued demand for its services, given sustained defense spending and cybersecurity needs. Investors may weigh its growth potential against sector-specific risks, such as budget fluctuations or contract recompetitions.

Strategic Advantages And Outlook

CACI’s strategic advantages include its entrenched relationships with federal agencies, technical expertise, and ability to execute complex projects. The outlook remains positive, supported by strong demand for national security and IT modernization solutions. However, reliance on government funding cycles necessitates prudent risk management to navigate potential budgetary or political uncertainties.

Sources

Company filings (10-K), CIK 0000016058