CACI
CACI
$466.42
-5.76%
CACI International Inc is a leading provider of information solutions and services, primarily serving U.S. government agencies in the intelligence, defense, and federal civilian sectors. The company operates as a key contractor in the government technology services industry, distinguishing itself through its deep domain expertise and long-term mission-critical contracts supporting national security and government modernization. The current investor narrative centers on the stock's defensive characteristics and resilience amid broader market volatility, given its reliance on stable government budgets, though recent price weakness reflects concerns over potential budget pressures and the stock's underperformance relative to the broader market.…
CACI
CACI
$466.42
Investment Opinion: Should I buy CACI Today?
Rating: Hold. The core thesis is that CACI is a fundamentally sound but fully valued company caught in a technical downtrend, making the risk/reward unattractive for new capital until either the price declines further or growth re-accelerates.
Supporting Evidence: The stock trades at a forward P/E of 16.68x, which implies expected earnings growth but is not deeply discounted. Revenue growth, while positive at 5.73% YoY, has decelerated sharply from the prior quarter's 11.2%. Profitability is under pressure, with net margins compressing by 127 basis points sequentially. While free cash flow generation is robust at $683 million TTM, the elevated short ratio of 4.38 and severe underperformance (-26.39% vs. SPY over 3 months) indicate strong negative momentum that fundamentals have yet to overcome.
Risks & Conditions: The two biggest risks are further multiple compression if growth slows below 5% and a break below key technical support at the 52-week low. This Hold rating would upgrade to a Buy if the forward P/E compressed below 14x (offering a better margin of safety) or if quarterly revenue growth re-accelerates above 8% YoY. It would downgrade to a Sell if the stock breaks decisively below $440 support on high volume. Relative to its own historical P/E range and its current growth profile, the stock appears fairly valued to slightly overvalued, pricing in a recovery that is not yet evident in the recent financial data.
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CACI 12-Month Price Forecast
The assessment is neutral with medium confidence. While CACI's defensive business model and strong cash flows provide a floor, the deteriorating technical picture and decelerating fundamental momentum create significant near-term headwinds. The current valuation does not offer a sufficient margin of safety to offset these risks. The stance would upgrade to bullish on a combination of price decline to the low $400s (offering a higher FCF yield) and stabilization of revenue growth. It would turn bearish if the next quarterly report shows growth falling below 4% or if net margins compress below 5%.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on CACI's 12-month outlook, with a consensus price target around $606.35 and implied upside of +30.0% versus the current price.
Average Target
$606.35
8 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
8
covering this stock
Price Range
$373 - $606
Analyst target range
A cohort of 8 analysts provides coverage for CACI, indicating solid institutional interest. The consensus sentiment leans bullish, as evidenced by recent institutional ratings which include several 'Buy' or 'Overweight' recommendations from firms like UBS, Stifel, and JP Morgan, alongside 'Neutral' or 'Hold' stances from Citigroup and Jefferies. Specific consensus price targets and implied upside are not available in the provided data, preventing a calculation of the average target and its spread relative to the current price of $519.4. The absence of explicit target prices in the dataset, despite the presence of analyst count and rating actions, suggests that while coverage is established, the precise quantitative consensus and its signal strength regarding future price appreciation cannot be determined from the inputs given.
Bulls vs Bears: CACI Investment Factors
The evidence currently tilts bearish, primarily driven by the stock's severe technical breakdown, decelerating growth, and valuation that remains elevated relative to its own history despite the sell-off. The bull case rests on defensive cash flows and analyst support, but these have not been sufficient to arrest the downtrend. The single most important tension in the investment debate is whether the stock's current valuation (21.22x trailing P/E) is justified given the clear slowdown in revenue growth (from 11.2% to 5.73% YoY) and margin compression. If growth re-accelerates, the premium multiple could hold; if not, a significant derating toward its historical average is likely.
Bullish
- Strong Free Cash Flow Generation: CACI generates robust free cash flow, with TTM FCF of $683.4 million. This provides significant financial flexibility for strategic initiatives, debt reduction, and potential shareholder returns without the need for external financing.
- Defensive Business Model & Low Beta: The company's reliance on U.S. government contracts provides revenue stability, a characteristic reflected in its low beta of 0.523. This makes the stock less volatile than the market, offering downside cushion during broader market sell-offs.
- Solid Liquidity and Moderate Leverage: CACI maintains a healthy current ratio of 1.47 and a manageable debt-to-equity ratio of 0.86. This financial position supports ongoing operations and provides a buffer against potential economic headwinds.
- Positive Revenue Growth Trajectory: The company continues to grow its top line, with the most recent quarterly revenue of $2.22 billion representing a 5.73% year-over-year increase. This demonstrates ongoing demand for its government IT services.
Bearish
- Pronounced Technical Downtrend: The stock is down 14.39% over the past three months and 9.27% over six months, underperforming the S&P 500 by 26.39% in the last quarter. Trading at $519.4, it is 24% below its 52-week high, indicating strong selling pressure and a lack of bullish momentum.
- Valuation Near Recent Historical High: With a trailing P/E of 21.22x, the stock trades near the upper end of its recent historical range (high of 23.70x, low of 10.97x). This suggests the market is not pricing in deep value despite the price decline, leaving limited margin of safety.
- Decelerating Revenue Growth & Margin Pressure: Quarterly revenue growth slowed to 5.73% YoY from 11.2% in the prior quarter. Concurrently, net margin compressed to 5.58% from 6.85% in Q4 FY2025, indicating potential competitive pricing pressure and rising costs.
- High Short Interest Indicating Skepticism: A short ratio of 4.38 is elevated, signaling that a significant number of investors are betting on further price declines. This reflects market concerns over the stock's near-term prospects and its recent underperformance.
CACI Technical Analysis
The stock is in a pronounced downtrend, having declined 9.27% over the past six months and 14.39% over the past three months, underperforming the S&P 500 by 26.39% over the latter period. Currently trading at $519.4, the price sits approximately 36% above its 52-week low of $439.67 but 24% below its 52-week high of $683.5, positioning it in the lower-middle portion of its annual range, which suggests a lack of bullish momentum and potential oversold conditions. Recent short-term momentum shows a modest 3.08% gain over the past month, which diverges from the longer-term downtrend and could signal a tentative stabilization or a dead-cat bounce; however, this positive move is weak relative to the stock's beta of 0.523, indicating it has been less volatile than the market but has still failed to capture broader market gains. Key technical support is anchored at the 52-week low of $439.67, while resistance looms near the 52-week high of $683.5; a decisive break below support would signal a continuation of the bearish trend, whereas a sustained move above the recent high near $635.4 is needed to suggest a reversal. The stock's low beta of 0.523 implies it is roughly half as volatile as the S&P 500, which historically provides downside cushion but has not prevented significant underperformance during the recent sell-off.
Beta
0.52
0.52x market volatility
Max Drawdown
-29.6%
Largest decline past year
52-Week Range
$445-$684
Price range past year
Annual Return
+2.6%
Cumulative gain past year
| Period | CACI Return | S&P 500 |
|---|---|---|
| 1m | -5.5% | +1.8% |
| 3m | -23.1% | +15.1% |
| 6m | -16.2% | +9.7% |
| 1y | +2.6% | +25.0% |
| ytd | -13.2% | +9.5% |
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CACI Fundamental Analysis
Revenue growth remains positive but has decelerated, with the most recent quarterly revenue of $2.22 billion representing a 5.73% year-over-year increase; however, this marks a slowdown from the 11.2% YoY growth seen in the prior quarter (Q1 FY2026), indicating a potential moderation in the top-line expansion trajectory. The company is profitable, posting net income of $123.86 million for the quarter, with a net margin of 5.58% and a gross margin of 9.3%; while gross margins have held relatively stable around the 9% level over recent quarters, net margins have compressed from 6.85% in Q4 FY2025, reflecting pressure from higher interest expenses and potentially competitive contract pricing. The balance sheet shows moderate leverage with a debt-to-equity ratio of 0.86, and the company maintains solid liquidity with a current ratio of 1.47; free cash flow generation is robust, with TTM free cash flow of $683.41 million, providing ample internal funding for operations and strategic initiatives without reliance on dividends, as evidenced by a payout ratio of 0%.
Quarterly Revenue
$2.2B
2025-12
Revenue YoY Growth
+0.05%
YoY Comparison
Gross Margin
+0.09%
Latest Quarter
Free Cash Flow
$683407000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CACI Overvalued?
Given positive net income, the primary valuation metric is the P/E ratio. The stock trades at a trailing P/E of 21.22x and a forward P/E of 16.68x, with the forward multiple's discount to the trailing figure implying the market expects earnings growth. Comparing to industry averages is challenging as specific sector multiples are not provided in the data, but the forward P/E of 16.7x appears reasonable for a company with modest single-digit growth and stable government contracts. Historically, the stock's own trailing P/E has ranged significantly, with a recent high of 23.70x in Q2 FY2026 and a low of 10.97x in mid-2021; the current multiple of 21.22x is near the upper end of its recent historical range, suggesting the market is not pricing in deep value despite the recent price decline and may still harbor expectations for steady performance.
PE
21.2x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 11x~24x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
14.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: CACI faces risks from its low-margin business model, with gross margins of just 9.3% and net margins of 5.58%, leaving little room for error. Recent margin compression from 6.85% to 5.58% quarter-over-quarter highlights sensitivity to cost inflation and competitive contract pricing. While free cash flow is strong at $683 million TTM, the deceleration in revenue growth to 5.73% YoY raises questions about the sustainability of top-line expansion needed to support its current valuation multiple.
Market & Competitive Risks: The primary market risk is valuation compression. Trading at a trailing P/E of 21.22x, which is near the high end of its recent historical range, the stock is vulnerable to multiple contraction if growth continues to slow. Its low beta of 0.523 offers some defensive characteristics but has not prevented a 26.39% underperformance versus the S&P 500 over three months, indicating stock-specific and sector-related selling pressure. Competitive risks include pressure from larger IT services firms and potential budget reallocations within its core U.S. government customer base.
Worst-Case Scenario: The worst-case scenario involves a continuation of the current downtrend, triggered by a significant budget cut announcement from a key government agency, coupled with a quarterly earnings miss that confirms the growth deceleration is structural. This could lead to analyst downgrades and a rapid derating of the P/E multiple toward its historical low near 11x. The realistic downside would be a retest of the 52-week low at $439.67, representing a potential loss of approximately -15% from the current price of $519.4. The historical max drawdown of -27.36% provides a gauge for extreme but possible volatility.
FAQ
The key risks are, in order of severity: 1) Valuation & Growth Risk: The P/E multiple is vulnerable to compression if revenue growth continues to slow below 5% YoY. 2) Technical Risk: The stock is in a strong downtrend, down 14.4% in 3 months, and a break below $440 support could trigger further selling. 3) Operational Risk: Thin gross margins of 9.3% provide little buffer against cost inflation or competitive pricing pressure, as seen in recent net margin compression. 4) Market Sentiment Risk: High short interest (short ratio 4.38) reflects bearish sentiment that can perpetuate downward momentum, and the stock has significantly underperformed the broader market.
The 12-month forecast presents three scenarios. The Base Case (55% probability) sees the stock trading between $520 and $600, as steady execution and defensive cash flows prevent a deeper decline but growth concerns limit upside. The Bull Case (25% probability) targets $635 to $683, requiring a re-acceleration of revenue growth and renewed investor interest in its defensive profile. The Bear Case (20% probability) warns of a drop to the $440-$500 range if growth slows further and technical support breaks. The base case is most likely, implying limited near-term movement from the current price around $519.
CACI appears fairly valued to slightly overvalued relative to its current fundamentals. Its trailing P/E of 21.22x is near the upper end of its own recent historical range (high of 23.70x), despite a clear slowdown in quarterly revenue growth from 11.2% to 5.73%. The forward P/E of 16.68x implies expected earnings growth, but given the margin pressure and growth deceleration, the market may still be pricing in an optimistic recovery. Compared to a pure value stock it seems expensive, but for a stable government contractor, the multiple is in a gray area, suggesting the market has not fully decided on its fair value.
CACI is not currently a compelling buy for most investors. While the company has defensive attributes and strong cash flow, the stock is in a pronounced downtrend, has underperformed the market by over 26% in three months, and is facing decelerating revenue growth. The forward P/E of 16.7x is reasonable but not cheap enough to offset these near-term risks. It could be a good buy for a very patient, value-oriented investor only if the price falls closer to its 52-week low near $440, offering a much higher margin of safety and a more attractive entry point.
CACI is more suitable for a long-term investment horizon, but with tempered expectations. Its business model is built on long-term government contracts, suggesting stability over years, not quarters. However, given the current technical downtrend and growth uncertainty, it is a poor candidate for short-term trading. Investors should be prepared to hold for a minimum of 2-3 years to potentially realize the value from its cash flow generation and await a possible cyclical recovery in government spending or contract awards. The lack of a dividend means total return is solely dependent on price appreciation.