CACI International (CACI) Names Its First COO, Is The Stock Still Cheap?

CACI International (CACI) has created its first Chief Operating Officer role, appointing Dr. Dave Young to the position. Investors may focus on how this leadership change could influence operations and capital allocation priorities.

See our latest analysis for CACI International.

Despite appointing a new Chief Operating Officer and advancing programs in areas like space and cloud, CACI International’s share price has come under pressure, with the stock down 11.55% over 30 days and 17.52% year to date, while the 5 year total shareholder return of 72.57% points to a much stronger longer term picture.

If you want to see how other companies exposed to AI and advanced tech are trading, now could be a good time to scan the market using the 50 AI infrastructure stocks.

With CACI International’s share price under pressure despite revenue of US$9.16b and net income of US$536.91m, markets appear cautious. Is this a reset that leaves the stock undervalued, or are investors already pricing in future growth?

Most Popular Narrative: 38% Undervalued

Based on the most followed narrative, CACI International’s fair value of $709.23 sits well above the recent $443.26 share price, putting the focus squarely on what is built into those assumptions.

Accelerated adoption of advanced technologies, such as software defined platforms, cyber solutions, and enterprise software modernization, is driving a shift in federal procurement toward higher value, tech enabled contracts where CACI's existing leadership, strong track record, and investments ahead of customer need enable higher win rates, contract stickiness, and margin expansion.

Read the complete narrative.

Want to see what this valuation is really baking in? The narrative leans heavily on faster top line expansion, better margins, and a richer earnings multiple than today. The exact mix of those three levers may surprise you.

Using a 7.97% discount rate, the narrative ties together projected revenue growth, modest margin improvement and a higher future P/E multiple to reach a fair value of $709.23 per share. With CACI International recently trading at $443.26, that gap reflects expectations for the company to convert its contract pipeline and tech heavy portfolio into higher earnings power than the current price implies.

Result: Fair Value of $709.23 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, CACI International’s heavy dependence on U.S. government budgets, along with ongoing execution challenges in areas like space and optical terminals, could quickly challenge this optimistic narrative.

Find out about the key risks to this CACI International narrative.

Another View: What CACI’s P/E Is Telling You

The first narrative suggests CACI International looks undervalued, but the P/E picture is less one sided. CACI trades on 18.2x earnings, above peer averages at 14.4x, yet slightly below the US Professional Services industry on 19x and the fair ratio estimate of 19.6x. That mix points to some valuation risk if peers stay cheaper, but also room for the market to move closer to the fair ratio. Which side of that trade off feels more realistic to you?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment on CACI International clearly mixed, with both risks and rewards in play, act quickly to review the details and judge the balance for yourself by checking the 4 key rewards and 1 important warning sign.

Looking for more investment ideas beyond CACI International?

If CACI International has caught your attention, do not stop there. Broadening your watchlist with other focused ideas could help you spot opportunities sooner.

• Target higher potential upside by scanning screener containing 19 high quality undiscovered gems that pair solid fundamentals with relatively low market attention.
• Strengthen your focus on capital preservation by reviewing 67 resilient stocks with low risk scores that show more resilient risk profiles.
• Zero in on financial resilience by checking solid balance sheet and fundamentals stocks screener (48 results) that combine dependable balance sheets with sound business models.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com