CACI
CACI
$616.48
+0.35%
CACI International is a provider of differentiated technology and mission expertise to U.S. national security customers, operating across two segments — Domestic Operations, which serves the intelligence, defense, and federal civilian agencies and generates the bulk of revenue, and International Operations, which serves allied governments and select commercial clients. With roughly 27,000 employees and a portfolio spanning signals intelligence, cyber, electronic warfare, space, and enterprise IT modernization, CACI occupies a specialized mid-tier position among government services contractors — larger and more technically differentiated than pure staffing players, but far smaller than primes like Lockheed Martin or RTX. The current investor narrative centers on an abrupt re-rating: shares surged in early August 2026, likely tied to a large contract award or raised guidance, and the debate now hinges on whether the resulting margin expansion (operating margin near 9.6% and gross margin above 33% in the latest quarter) is durable or a one-time mix benefit. A recent multi-billion-dollar acquisition has simultaneously shifted the balance sheet — debt repayment of roughly $2.24 billion alongside $2.64 billion of acquisition outlays in the March 2026 quarter — making integration execution and free cash flow conversion the key swing factors for the stock.…
CACI
CACI
$616.48
Investment Opinion: Should I buy CACI Today?
Rating: Buy. The core thesis is that CACI offers a rare combination of consistent margin expansion, accelerating revenue growth, and a forward valuation (16.35x) near the low end of its historical range, with analyst consensus of 'buy' and an average target of $732.60 implying 19.3% upside. The recent acquisition has shifted the balance sheet, but the company's stable free cash flow generation ($625.7 million TTM) and low beta (0.591) provide a margin of safety.
The supporting evidence is compelling: revenue grew 8.49% year-over-year to $2.351 billion, operating margin expanded to 9.74% from 9.06%, and EBITDA margin climbed to 12.24% from 11.60%. The forward PE of 16.35x is below the typical 20-25x range for government IT peers, and the FCF yield of roughly 6.1% is attractive for a defense-tech name. The PEG ratio of 2.37 is a concern, but it reflects the market's expectation of continued growth, which the company has delivered for three consecutive quarters.
The biggest risks that could invalidate the thesis are: (1) acquisition integration missteps leading to margin compression and cash flow deterioration, (2) federal budget pressure or a continuing resolution that delays contract awards, and (3) a miss against consensus EPS estimates of $41.50, which could trigger multiple compression toward the low end of the historical range (16.6x). This Buy would upgrade to a Strong Buy if operating margins hold above 10% for two consecutive quarters, or downgrade to Hold if revenue growth decelerates below 5% or if debt-to-equity rises above 1.5x. Relative to its history and peers, CACI appears fairly valued to slightly undervalued, with room for multiple re-rating if execution holds.
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CACI 12-Month Price Forecast
CACI presents a favorable risk/reward setup with a bullish stance, though confidence is medium given the recent acquisition-related leverage. The company has demonstrated consistent margin expansion and accelerating revenue growth, while the forward valuation remains near the low end of its historical range. Analyst sentiment is positive, with a consensus 'buy' rating and a target price implying nearly 20% upside. The key risk is integration execution and the leveraged balance sheet, which could pressure margins and cash flow if not managed well. I would upgrade to high confidence if operating margins hold above 10% for two consecutive quarters, and downgrade to neutral if revenue growth decelerates below 5% or if debt-to-equity rises above 1.5x.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on CACI's 12-month outlook, with a consensus price target around $732.60 and implied upside of +18.8% versus the current price.
Average Target
$732.60
0 analysts
Implied Upside
+18.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$540 - $892
Analyst target range
Coverage is robust, with 15 analysts following CACI and a consensus recommendation of "buy" (mean rating of 1.59 on a 1-5 scale where 1 is a strong buy). The average target price of $732.60 implies roughly 19.3% upside from the current $614.31, a bullish signal that stands in contrast to the stock's recent 1-month softness. Consensus revenue estimates of $12.13 billion and EPS estimates averaging $41.50 (range $34.01 to $47.67) imply analysts expect continued double-digit growth and margin leverage ahead.
The target range of $540 to $892 is wide — a spread of $352, or 57% of the current price — signaling meaningful disagreement about the company's trajectory. The high target of $892 (roughly 45% above current) likely assumes successful acquisition integration, sustained margin expansion toward double digits, and multiple re-rating toward defense-tech peers; the low target of $540 (about 12% below current) prices in integration missteps, margin compression from the leveraged balance sheet, or budget pressure on federal services spending. Institutional ratings show a stable, mixed picture: TD Cowen and JP Morgan remain Buy/Overweight, while Citigroup and Jefferies have stayed Neutral/Hold through 2026 with no recent upgrades or downgrades — suggesting conviction is high among bulls but the neutral camp is waiting for proof on cash flow and integration before turning positive.
Bulls vs Bears: CACI Investment Factors
The bull case currently has stronger evidence, anchored by consistent multi-quarter margin expansion (operating margin up to 9.74% from 9.06%), accelerating revenue growth (8.49% YoY), and a forward PE of 16.35x near the low end of its historical range. The analyst consensus of 'buy' with a $732.60 average target (19.3% upside) reinforces the positive setup. However, the bear case is not without merit: leverage has risen meaningfully (debt-to-equity 1.21x, interest coverage down to 4.38x from 7.5x), and the PEG ratio of 2.37 leaves little room for execution missteps. The single most important tension is whether the recent margin expansion is durable or a one-time acquisition mix benefit — if margins hold above 9.5% and free cash flow conversion remains stable, the stock can re-rate toward peer multiples; if margins compress, the leveraged balance sheet becomes a more pressing concern.
Bullish
- Analyst consensus implies 19% upside: 15 analysts rate CACI a 'buy' with a mean rating of 1.59 (1=strong buy) and an average target price of $732.60, representing 19.3% upside from the current $614.31. The high target of $892 implies 45% upside, suggesting a meaningful cohort of analysts sees substantial re-rating potential.
- Margin expansion is consistent and multi-quarter: Operating margin has expanded sequentially from 9.28% to 9.30% to 9.74% over the last three quarters, while net margin rose from 5.16% to 5.55% year-over-year. EBITDA margin also climbed to 12.24% from 11.60%, indicating durable operational leverage rather than a one-time mix benefit.
- Forward PE near low end of historical range: The forward PE of 16.35x sits near the bottom of CACI's three-year range of 16.6x to 23.7x, while the trailing PE of 19.08x is below the 23.0x recorded in the March 2026 quarter. This suggests the market is not yet pricing in optimistic growth expectations, leaving room for multiple re-rating.
- Revenue growth accelerating with stable run-rate: Revenue grew 8.49% year-over-year to $2.351 billion in the March 2026 quarter, up from roughly 5.4% growth in the December 2024 quarter. The trailing four-quarter run-rate of $9.17 billion shows sequential stability with no quarter below $2.22 billion, supporting the acquisition-aided acceleration narrative.
Bearish
- Leverage surged for acquisition: Debt-to-equity stands at 1.21x with $2.24 billion of debt repayment against $2.64 billion of acquisition spending in the March 2026 quarter, funded by $2.22 billion of net financing inflows. Interest coverage has fallen to 4.38x from 7.5x a year ago, making integration execution and cash flow conversion critical.
- PEG ratio of 2.37 signals premium to growth: Even after the forward PE discount, the PEG ratio of 2.37 indicates investors are paying up relative to the growth rate. This means execution against consensus EPS estimates of $41.50 is essential to justify the multiple, leaving little room for disappointment.
- Near-term momentum decelerating: The 1-month change of -2.67% conflicts with the +33.09% 3-month gain, and relative strength versus SPY is -3.89 points over the past month. The stock is also roughly 10% below its 52-week high of $683.50, suggesting the August rally has cooled and near-term momentum has faded.
- Wide analyst target range signals disagreement: The target range of $540 to $892 spans $352, or 57% of the current price, indicating meaningful disagreement about the company's trajectory. The low target of $540 (12% below current) prices in integration missteps or margin compression from the leveraged balance sheet.
CACI Technical Analysis
CACI is in a sustained, powerful uptrend that has recently transitioned into a high-level consolidation. The stock is up 18.54% over the past year and a striking 33.09% over three months, and at $614.31 it sits at roughly 72% of its 52-week range of $434.70 to $683.50 — closer to the highs than the midpoint, but notably about 10% below the 52-week peak, meaning momentum has cooled from its August extremes rather than broken down. The 1-year gain of 18.54% versus the S&P 500's 15.53% represents modest relative outperformance (+3.01 points), but the real story is the 3-month relative strength of +30.40 points, which shows the stock decisively decoupled from the index during the summer rally.
Short-term momentum is decelerating even as the intermediate trend remains strongly positive. The 1-month change of -2.67% conflicts with the +33.09% 3-month and +16.53% 6-month gains, a classic divergence that typically signals either healthy consolidation after a parabolic move or the early stage of a trend reversal. The stock's path supports the consolidation read: it spiked from $518 on August 5 to $680 by August 12, then spent September chopping between roughly $607 and $648 before slipping to $581.85 on October 7 and recovering to $614.31. Relative strength versus SPY is -3.89 points over the past month, confirming near-term laggard status, though the shallow depth of the pullback (max drawdown of -33.44% over the trailing period, driven by the June swoon from $532 to $440) argues the primary uptrend remains intact.
Key technical levels are well defined. Resistance sits at the 52-week high of $683.50, roughly 11% above the current price; a breakout there would confirm the August gap as a valid continuation platform and likely trigger momentum-driven buying. Support is anchored at the 52-week low of $434.70, about 29% below current levels, with an intermediate shelf around $580-$600 where the October pullback found buyers. The beta of 0.591 is a critical risk-management input: CACI is roughly 41% less volatile than the market, which means position sizing can be larger for the same risk budget, but it also implies the stock will likely lag in a broad risk-on melt-up — consistent with its modest 1-year relative strength despite the sharp 3-month surge.
Beta
0.59
0.59x market volatility
Max Drawdown
-33.4%
Largest decline past year
52-Week Range
$435-$684
Price range past year
Annual Return
+19.5%
Cumulative gain past year
| Period | CACI Return | S&P 500 |
|---|---|---|
| 1m | -1.7% | +0.6% |
| 3m | +39.9% | +2.4% |
| 6m | +20.3% | +7.8% |
| 1y | +19.5% | +15.4% |
| ytd | +14.7% | +12.4% |
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CACI Fundamental Analysis
Revenue is growing at a solid, steady clip. The most recent quarter (March 2026) delivered $2.351 billion in revenue, up 8.49% year-over-year from $2.167 billion in the prior-year Q3, and the trailing four-quarter run-rate of roughly $9.17 billion ($2.351B + $2.220B + $2.288B + $2.304B) shows sequential stability with no quarter below $2.22 billion. The multi-quarter trend is one of gradual acceleration: YoY growth stepped from roughly 5.4% in the December 2024 quarter to 8.49% most recently, aided by acquisition contribution. Segment data shows Technology Services at $1.327 billion and Services/Other at $1.024 billion, with the technology-heavy mix — the higher-value, more differentiated work — representing about 56% of revenue and supporting the margin narrative.
Profitability is healthy and improving. Q3 net income was $130.4 million on a 5.55% net margin, with gross margin of 31.44% and operating margin of 9.74% — both above the year-ago quarter's 9.06% operating margin and 5.16% net margin. The four-quarter operating margin progression (9.28% → 9.30% → 9.74%) shows consistent expansion, and EBITDA margin has climbed to 12.24% from 11.60% a year earlier. For government services, a ~9.7% operating margin is respectable-to-good, and the direction of travel — aided by higher-margin cyber and SIGINT work plus acquisition mix — is the key fundamental support for the stock's re-rating.
Balance sheet and cash flow are the watch items. Debt-to-equity stands at 1.21x with a current ratio of 1.48, and the March quarter saw $2.24 billion of debt repayment against $2.64 billion of acquisition spending, funded by $2.22 billion of net financing inflows — a clear signal the company levered up for M&A. Free cash flow TTM is $625.7 million, with quarterly FCF of $156.4 million (Q3), $187.3 million (Q2), and $154.1 million (Q1), a stable ~$150-190 million cadence; against a $10.2 billion market cap that is a roughly 6.1% FCF yield, which is attractive for a defense-tech name. ROE of 12.01% and ROA of 5.76% are solid, and interest coverage of 4.38x is adequate though down from 7.5x a year ago — the leverage taken on for the acquisition is the main financial risk to monitor.
Quarterly Revenue
$2.4B
2026-03
Revenue YoY Growth
+8.5%
YoY Comparison
Gross Margin
31.4%
Latest Quarter
Free Cash Flow
$625689000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CACI Overvalued?
Because CACI is profitable (net income of $130.4 million in the latest quarter, positive TTM earnings), the PE ratio is the appropriate primary metric. The stock trades at 19.08x trailing earnings but only 16.35x forward earnings — a roughly 14% compression that implies the market expects meaningful EPS growth, consistent with the consensus forward EPS estimate of $41.50 versus the current run-rate. The PEG ratio of 2.37 suggests that even after the forward discount, investors are paying up relative to the growth rate, so execution against estimates is essential to justify the multiple.
On a peer basis, CACI screens cheap for a technology-services and defense-tech name. Its 19.08x trailing PE and 16.35x forward PE sit below the typical 20-25x range commanded by government IT and defense-electronics peers, while the 1.07x price-to-sales and 1.96x EV/sales are low in absolute terms — though the 13.22x EV/EBITDA is more mid-pack. The 2.29x price-to-book is modest. The apparent discount likely reflects the leverage taken on for the recent acquisition and the lower-margin legacy services mix, but if margin expansion continues, there is room for multiple re-rating toward peer levels.
Historically, CACI's own valuation band provides useful context. Its PE has ranged from roughly 16.6x to 23.7x over the past three years, and the current 19.08x sits near the middle of that band — neither stretched nor depressed. Notably, the trailing PE of 19.08x is below the 23.0x recorded in the March 2026 quarter, meaning the stock's price has risen but earnings have risen faster, a healthy dynamic. The forward PE of 16.35x is near the low end of the historical range, suggesting the market is not yet pricing in optimistic expectations — a potential value opportunity if the growth and margin trajectory hold.
PE
19.1x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 17x~24x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.2x
Enterprise Value Multiple
Investment Risk Disclosure
CACI's financial risk profile has shifted meaningfully following its multi-billion-dollar acquisition. Debt-to-equity now stands at 1.21x, and the March 2026 quarter saw $2.24 billion of debt repayment against $2.64 billion of acquisition outlays, funded by $2.22 billion of net financing inflows. Interest coverage has fallen to 4.38x from 7.5x a year ago, and interest expense of $52.3 million in the latest quarter consumes a meaningful portion of operating income of $228.9 million. Free cash flow TTM of $625.7 million provides a cushion, but quarterly FCF of $156.4 million (Q3) is below the $187.3 million (Q2) level, and any integration misstep could pressure cash conversion further. Revenue concentration in U.S. federal agencies remains a structural risk, with Domestic Operations generating the bulk of revenue and exposure to budget cycles and continuing resolutions.
Market and competitive risks center on valuation compression and sector rotation. At 19.08x trailing earnings and 16.35x forward earnings, CACI trades below the typical 20-25x range for government IT and defense-electronics peers, but the PEG ratio of 2.37 suggests the market is already paying for growth. If the company misses consensus EPS estimates of $41.50 or revenue estimates of $12.13 billion, the multiple could compress toward the low end of its historical range (16.6x), implying roughly 13% downside from current levels. The beta of 0.591 means CACI is less sensitive to broad market moves, but it also implies the stock will likely lag in a risk-on melt-up, consistent with its modest 1-year relative strength of +3.01 points versus the S&P 500's 15.53% gain. Competitive disruption from larger primes like Lockheed Martin and RTX, as well as pure-play staffing firms, could pressure pricing on recompete contracts.
The worst-case scenario would involve a combination of acquisition integration missteps, margin compression from the leveraged balance sheet, and federal budget pressure on services spending. In this scenario, the stock could retest its 52-week low of $434.70, representing roughly 29% downside from the current $614.31. The analyst low target of $540 implies a more moderate 12% decline, but the stock's max drawdown of -33.44% over the trailing period (driven by the June swoon from $532 to $440) demonstrates that sharp corrections are possible. A realistic adverse scenario would see the stock fall to the $540-$580 range (-6% to -12%) if margins compress modestly, or to the $434-$470 range (-24% to -29%) if integration disappoints and budget headwinds intensify.
FAQ
The most severe risk is acquisition integration and leverage: debt-to-equity is 1.21x, interest coverage has fallen to 4.38x from 7.5x, and any integration misstep could pressure margins and cash flow. Second is valuation compression risk: the PEG ratio of 2.37 leaves little room for earnings misses, and a decline toward the low end of the historical PE range (16.6x) would imply roughly 13% downside. Third is federal budget risk: CACI's revenue is concentrated in U.S. government agencies, and a continuing resolution or budget cuts could delay contract awards. Fourth is competitive risk from larger primes and pure-play staffing firms, which could pressure pricing on recompete contracts. The worst-case scenario could see the stock retest its 52-week low of $434.70, representing 29% downside.
Our 12-month forecast has three scenarios: a bull case (30% probability) with a target range of $732-$892, driven by successful acquisition integration and margin expansion toward 10.5%; a base case (50% probability) with a target range of $680-$750, assuming steady 8-9% revenue growth and margins holding around 9.5-10%; and a bear case (20% probability) with a target range of $434-$540, reflecting integration disappointments and budget pressure. The base case is most likely, anchored by the analyst average target of $732.60 and supported by the company's consistent execution. The key assumption behind the base case is that operating margins remain above 9.5% and free cash flow stays above $600 million.
CACI appears fairly valued to slightly undervalued relative to its own history and peers. The trailing PE of 19.08x is below the 23.0x recorded in the March 2026 quarter and sits near the middle of its three-year range of 16.6x to 23.7x, while the forward PE of 16.35x is near the low end of that range. Compared to government IT and defense-electronics peers, which typically trade at 20-25x earnings, CACI's 19.08x trailing PE represents a discount. The PEG ratio of 2.37 suggests the market is paying a premium relative to the growth rate, but this is offset by the 6.1% free cash flow yield and the 19.3% upside to analyst targets. The market appears to be pricing in modest growth expectations, leaving room for multiple re-rating if margin expansion continues.
From a risk/reward perspective, CACI offers a favorable setup with 19.3% upside to the analyst average target of $732.60 and a forward PE of 16.35x that sits near the low end of its historical range. The company has delivered three consecutive quarters of margin expansion, with operating margin rising to 9.74% from 9.06% year-over-year, and revenue growth accelerating to 8.49%. However, the biggest downside risk is the leveraged balance sheet following the recent acquisition, with debt-to-equity at 1.21x and interest coverage down to 4.38x from 7.5x. For long-term investors with a moderate risk tolerance and a 12-18 month horizon, CACI is a good buy, particularly on pullbacks toward the $580-$600 support zone. For short-term traders, the recent momentum deceleration (-2.67% over one month) suggests waiting for a clearer catalyst.
CACI is best suited for long-term investment with a minimum holding period of 12-18 months. The company is in a growth stage with a beta of 0.591, meaning it is 41% less volatile than the market, which supports a buy-and-hold approach. The stock pays no dividend (payout ratio 0%), so returns depend entirely on capital appreciation, and earnings visibility is supported by a $9.17 billion trailing revenue run-rate and a backlog of government contracts. Short-term trading is less attractive given the recent momentum deceleration and the wide analyst target range of $540-$892, which signals near-term uncertainty. Long-term investors can look through the acquisition-related leverage and focus on the margin expansion trajectory and free cash flow generation.