CACI
CACI
$494.04
-3.80%
CACI International Inc is a leading provider of information solutions and services, primarily serving U.S. government agencies and departments in the intelligence, defense, and federal civilian sectors. The company operates as a key defense and IT services contractor, distinguished by its deep expertise in national security missions, government modernization, and specialized services like functional software development and data analysis. The current investor narrative revolves around its resilience and growth prospects within the stable but competitive government contracting landscape, with recent attention likely focused on its ability to secure new contracts and navigate federal budget cycles, as suggested by its recent revenue growth and the stock's significant price volatility.…
CACI
CACI
$494.04
Investment Opinion: Should I buy CACI Today?
Rating & Thesis: Hold. CACI is a fundamentally sound company caught in a severe technical downdraft, creating a disconnect between its stable operations and negative price momentum that warrants caution. The limited analyst coverage shows a mix of Buy and Hold ratings, reflecting this uncertainty.
Supporting Evidence: The primary valuation metric, a forward P/E of 16.36x, appears reasonable for a company with 5.73% YoY revenue growth and strong FCF generation of $683M. Profitability is stable with a net margin of 5.58% and an ROE of 12.84%. However, these positives are counterbalanced by the stock's severe underperformance (-17.29% over 3 months) and its position near the bottom of its 52-week range.
Risks & Conditions: The two biggest risks are the continuation of the technical downtrend eroding investor confidence and a deceleration in revenue growth below 5%. This Hold rating would upgrade to Buy if the stock shows sustained technical recovery above its 200-day moving average or if the forward P/E compresses further toward 14x on stable earnings. It would downgrade to Sell if quarterly revenue growth turns negative or if the stock breaks decisively below its 52-week low. Currently, the stock appears fairly valued to slightly undervalued on fundamentals but remains overvalued from a momentum perspective.
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CACI 12-Month Price Forecast
The AI assessment is neutral based on a clash between deteriorating price momentum and stable, cash-generative fundamentals. The forward P/E suggests the market has priced in significant pessimism, but the technical breakdown and high short interest indicate the selling may not be over. Confidence is medium due to the limited analyst coverage, which reduces visibility. The stance would upgrade to bullish on a confirmed technical reversal above $550 on strong volume, coupled with a quarterly earnings report that reaffirms the 5%+ growth trajectory. It would downgrade to bearish on a breakdown below $500, which would signal a failure of the current support level and likely lead to a test of the 52-week low.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on CACI's 12-month outlook, with a consensus price target around $642.25 and implied upside of +30.0% versus the current price.
Average Target
$642.25
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$395 - $642
Analyst target range
CACI is covered by a limited set of five analysts, with institutional ratings showing a mix of Buy, Hold, and Overweight recommendations from firms like UBS, Stifel, JP Morgan, Citigroup, and Jefferies. The consensus sentiment leans moderately bullish, though the limited coverage pool means the average target price and implied upside cannot be precisely calculated from the provided data, which only includes EPS and revenue estimates. The target price range is also not specified in the data, preventing analysis of the high and low target assumptions. The pattern of recent institutional ratings shows stability, with no downgrades in the provided list and actions primarily consisting of reiterations of existing Buy, Overweight, or Hold ratings. The limited number of covering analysts is typical for a mid-cap government contractor and can lead to higher volatility and less efficient price discovery compared to heavily covered large-cap stocks.
Bulls vs Bears: CACI Investment Factors
The evidence currently tilts bearish, driven by severe technical breakdown and persistent underperformance that overshadows fundamentally sound operations. The bull case rests on valuation, cash flow, and defensive revenue, while the bear case is dominated by negative price momentum and sentiment. The single most important tension is between the stock's attractive fundamental valuation (16.36x forward P/E) and its broken technical picture; resolution requires determining whether the price decline is an overreaction creating value or a justified repricing of growth prospects.
Bullish
- Strong Free Cash Flow: CACI generates robust free cash flow of $683.41 million over the TTM, providing significant financial flexibility for strategic investments, debt reduction, or shareholder returns. This strong cash generation underpins a healthy balance sheet with a manageable debt-to-equity ratio of 0.86.
- Attractive Forward Valuation: The stock trades at a forward P/E of 16.36x, a significant discount to its trailing P/E of 21.22x, implying the market expects substantial earnings growth. This forward multiple appears reasonable for a company with stable government-backed revenue and a 12.84% ROE.
- Stable Government Revenue Growth: CACI exhibits consistent, low-volatility growth with Q2 2026 revenue of $2.22 billion, up 5.73% YoY. This steady demand from U.S. government agencies provides a defensive revenue base, insulating the business from severe economic downturns.
- Healthy Financial Position: The company maintains a solid current ratio of 1.47 and a return on equity of 12.84%, indicating operational efficiency and financial health. Its moderate leverage (D/E of 0.86) is well-supported by its strong cash flow profile.
Bearish
- Severe Technical Downtrend: The stock is in a pronounced downtrend, down 17.29% over 3 months and trading at just 25% of its 52-week range. A high short ratio of 4.21 and a recent max drawdown of -24.21% signal intense selling pressure and negative sentiment.
- Chronic Underperformance vs. Market: CACI has shown severe relative weakness, underperforming the SPY by -18.51% over the past month and -21.43% over three months. Despite a low beta of 0.629, the stock has failed to provide its typical downside cushion during recent market strength.
- Thin Operating Margins: The company operates with thin gross and operating margins of approximately 9.3%, which is typical for government contracting but limits profitability expansion. Net margin of 5.58% leaves little room for error in contract execution and cost management.
- Limited Analyst Coverage & Visibility: With only 5 covering analysts, the stock suffers from lower visibility and potentially higher volatility due to less efficient price discovery. The lack of a clear consensus target price range adds uncertainty for investors.
CACI Technical Analysis
The prevailing price trend for CACI is a pronounced downtrend, with the stock down 17.29% over the past three months and 8.71% over the past six months, culminating in a current price of $513.29. This price sits at just 25% of its 52-week range ($409.62 to $683.50), indicating the stock is trading much closer to its annual lows than its highs, which may suggest a potential value opportunity but also reflects significant negative momentum and investor pessimism. Recent momentum has been decisively negative, with the stock declining 8.53% over the past month, a trend that diverges sharply from its positive 1-year return of 11.86%, signaling a significant near-term breakdown and potential capitulation after a longer-term period of strength. The stock's beta of 0.629 indicates it is approximately 37% less volatile than the broader market (SPY), which, while providing some downside cushion during market sell-offs, has not prevented a severe underperformance, as evidenced by a -18.51 relative strength versus the SPY over the past month. Key technical levels are clearly defined, with the 52-week low of $409.62 acting as major support and the 52-week high of $683.50 serving as formidable resistance; a sustained breakdown below support would signal a continuation of the bearish trend, while a recovery above the recent downtrend line is needed to suggest stabilization. The stock's low beta suggests muted volatility relative to the market, but the recent max drawdown of -24.21% and high short ratio of 4.21 highlight that the stock is experiencing significant idiosyncratic selling pressure and bearish sentiment.
Beta
0.54
0.54x market volatility
Max Drawdown
-25.4%
Largest decline past year
52-Week Range
$410-$684
Price range past year
Annual Return
+7.0%
Cumulative gain past year
| Period | CACI Return | S&P 500 |
|---|---|---|
| 1m | -14.2% | +10.4% |
| 3m | -18.4% | +5.5% |
| 6m | -15.5% | +8.0% |
| 1y | +7.0% | +28.4% |
| ytd | -8.1% | +6.1% |
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CACI Fundamental Analysis
CACI's revenue trajectory shows steady, moderate growth, with the most recent quarterly revenue of $2.22 billion representing a 5.73% year-over-year increase. This growth is consistent with the multi-quarter trend, as revenue has increased from $2.05 billion in Q1 2025 to the current $2.22 billion, indicating stable demand from its government client base. The revenue segment data shows Technology Services ($1.30 billion) is the larger driver compared to Service, Other ($0.92 billion), suggesting core IT and technical services are the primary growth engine. The company is profitable, reporting net income of $123.86 million for the latest quarter, translating to a net margin of 5.58%. Gross margin for the quarter was 9.30%, which appears stable but is relatively thin, typical for a government services contractor where pricing is often cost-plus. The operating margin of 8.86% (using the operating income ratio) indicates the company maintains reasonable operational efficiency within its competitive industry structure. The balance sheet and cash flow position is solid, with a debt-to-equity ratio of 0.86, indicating moderate leverage that is manageable for a company of its size and cash flow profile. Free cash flow over the trailing twelve months is a robust $683.41 million, providing ample internal funding for operations, potential acquisitions, or share repurchases. The current ratio of 1.47 and return on equity of 12.84% further underscore a healthy financial position with efficient use of shareholder capital.
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 CACI's positive net income, the primary valuation metric selected is the Price-to-Earnings (PE) ratio. The trailing PE ratio is 21.22x, while the forward PE is notably lower at 16.36x, indicating the market expects earnings growth, with the gap implying an anticipated earnings increase of approximately 30% based on current estimates. Compared to industry averages, CACI's trailing PE of 21.22x trades at a premium to the broader market but is in line with or potentially below specialized government IT services peers, though a direct industry average multiple is not provided in the data for a quantified spread. The premium, if it exists, is likely justified by the company's stable government-backed revenue streams, consistent profitability, and strong free cash flow generation, which reduce fundamental risk. Historically, CACI's own PE ratio has fluctuated, with recent historical data showing a PE of 23.70 as of Q2 2026 and 21.97 as of Q1 2026; the current trailing PE of 21.22x sits slightly below these recent readings, suggesting the stock is not at historical highs and may be pricing in more conservative expectations following the recent price decline.
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 thin operating margin structure (~9.3%), which provides limited buffer against cost overruns or competitive pricing pressure. While leverage is moderate at a D/E of 0.86, the company's revenue concentration with U.S. government agencies, though stable, creates dependency on federal budget cycles and contract renewals. Earnings volatility is evident, with net income fluctuating from $157.9M in Q4 2025 to $111.9M in Q3 2025, challenging the consistency needed to support its valuation premium.
Market & Competitive Risks: The stock trades at a trailing P/E of 21.22x, which may be at risk of compression if growth decelerates or investor sentiment continues to favor non-defense sectors. Its low beta of 0.629 has not prevented a severe 24.21% max drawdown, indicating significant idiosyncratic risk separate from broader market moves. Competitive pressures in the government IT services space could further pressure already thin margins, while any negative developments in federal defense or intelligence spending would directly impact growth.
Worst-Case Scenario: The worst-case scenario involves a continuation of the technical breakdown, triggering a flight of remaining investors and driving the stock to retest its 52-week low of $409.62. This could be catalyzed by a significant contract loss, a guidance cut due to federal budget delays, or a sector-wide de-rating of government contractors. From the current price of $513.29, this scenario implies a realistic downside of approximately -20% to the 52-week low, with further losses possible if the fundamental outlook deteriorates sharply.
FAQ
The key risks are, in order of severity: 1) Technical & Sentiment Risk: The stock is in a severe downtrend with a high short ratio, risking further momentum-driven selling. 2) Operational Risk: Thin operating margins (~9.3%) provide little cushion for cost overruns. 3) Customer Concentration Risk: Overwhelming reliance on U.S. government budgets subjects growth to political and fiscal cycles. 4) Valuation Risk: A trailing P/E of 21.22x could compress further if growth decelerates from its current 5.73% pace.
The 12-month forecast presents three scenarios. The Base Case (60% probability) sees range-bound trading between $525 and $600 as stable fundamentals clash with technical headwinds. The Bull Case (25% probability) projects a rally to $650-$683 on successful technical reversal and contract wins. The Bear Case (15% probability) warns of a drop to $410-$500 if the downtrend continues. The most likely outcome is the Base Case, assuming the company continues to execute on its steady, mid-single-digit growth path without major surprises.
CACI appears fairly valued to slightly undervalued based on fundamentals. Its trailing P/E of 21.22x is below its recent historical readings (e.g., 23.70 in Q2 2026), and its forward P/E of 16.36x implies a significant earnings growth expectation. The Price-to-Sales ratio of 1.23 and EV/EBITDA of 14.42 are reasonable for a stable government contractor. The market is pricing in a discount due to recent underperformance, but not a deep value bargain, as thin ~9% operating margins limit upside potential.
CACI presents a mixed opportunity. For a patient, value-oriented investor, the current price and forward P/E of 16.36x may be attractive given the company's stable revenue and strong $683M free cash flow. However, it is not a good buy for traders or those sensitive to momentum, as the stock is in a severe downtrend, down 17% over three months, with a high short ratio of 4.21 indicating bearish sentiment. The investment hinges on believing the fundamental value will ultimately outweigh the current technical and sentiment headwinds.
CACI is more suitable for a long-term investment horizon of 3+ years. Its low beta of 0.629 and stable government revenue base make it a defensive holding, but the current technical weakness and lack of near-term catalysts argue against short-term trading. A long-term holder can collect the value created by its free cash flow while waiting for sentiment to improve. The stock does not pay a dividend, so total return is dependent on price appreciation, which requires patience given the current market narrative.