CACI (CACI): Riding the Bullish Trend with AI-Powered Options

CACI International Inc. provides 'Expertise' and 'Technology' solutions, primarily supporting national security in the intelligence, defense, and federal civilian sectors. 'Expertise' encompasses talent with technical and functional knowledge, including software development and intelligence support. 'Technology' includes agile software development, AI-augmented data platforms, and electromagnetic spectrum capabilities. CACI serves U.S. government agencies, foreign governments, and commercial enterprises. The company's business strategy centers on securing new customers and contracts, winning repeat business, and maintaining long-term customer relationships through a market-focused business development organization. CACI differentiates itself by combining comprehensive knowledge of agency operations with its 'Expertise' and 'Technology' offerings, enabling it to compete for multi-million dollar contracts. The company also maintains strategic partnerships to complement its capabilities and support growth objectives.

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CACI's technical outlook is moderately bullish. The stock has experienced a substantial rally over the past 90 days, climbing from approximately $453.57 on June 20th to close recently at $578.50 on October 27th. The price currently trades above its 21-day EMA ($512.87), 50-day SMA ($496.68) and 200-day SMA ($443.81), signaling a strong uptrend. Momentum indicators support this bullish view. The MACD line (8.48) is well above its signal line (7.84), and the RSI is at 66.01, indicating strong buying pressure but not yet in overbought territory. While the Stochastic %K (73.78) is slightly below the %D (67.56), both are in moderately high territory. The recent price action shows a breakout above prior resistance levels, although the ATR has increased to 13.95, suggesting higher volatility. Given the strong uptrend and positive momentum, CACI is likely to continue its upward trajectory over the next 1-3 months, although pullbacks are possible given the elevated volatility.

CACI's MD&A presents a generally positive picture. `Revenues` increased by 11.2% to $2,287.6 million for the three months ended September 30, 2025, compared to $2,056.9 million in the prior year, driven by organic growth of 5.5%. Direct costs as a percentage of revenue decreased slightly from 68.8% to 67.6%. The company's backlog increased by 4.6% to $33.9 billion. `Net cash provided by operating activities` increased significantly to $171.1 million for the three months ended September 30, 2025, compared to $34.7 million for the same period in 2024, primarily due to higher earnings and favorable changes in working capital. The company believes that 'the total addressable market for our offerings is sufficient to support the Company’s plans and is expected to continue to grow over the next several years'. Management expresses confidence that 'the combination of internally generated funds, available bank borrowings, and cash and cash equivalents on hand will provide the required liquidity and capital resources necessary to fund on-going operations...over the next twelve months'.

CACI's Q4 and FY25 earnings call paints a moderately bullish picture, supported by strong financial performance and optimistic guidance. CEO John Mengucci emphasized the company's resilience and strategic positioning, stating, 'We don't need to transform. We're already here.' For FY25, CACI delivered revenue growth of 16%, an EBITDA margin of 11.2%, and free cash flow of $442 million. Furthermore, they won $10 billion in contract awards, representing a book-to-bill of 1.1x. Looking ahead, the company projects FY26 revenue growth of nearly 8% at the midpoint, an EBITDA margin in the mid-11% range, and free cash flow per share growth of over 60%. CFO Jeff MacLauchlan highlighted the company's healthy long-term cash flow characteristics and modest leverage, adding that the company opportunistically repurchased $150 million of shares. While a potential government shutdown poses a risk, management seems confident in navigating such an environment. The company expects approximately 84% of its revenue to come from existing programs, 11% from recompetes, and 5% from new business.

CACI's financial performance presents a mixed picture. Revenue has generally increased from $1.83B in Q2 2024 to $2.29B in Q1 2026, indicating positive top-line growth. However, the gross profit ratio has fluctuated, starting at 0.073 in Q2 2024 and reaching 0.093 in Q1 2026, suggesting some variability in profitability. Operating cash flow has also been inconsistent, with $34.7M in Q1 2025 and $171.1M in the most recent quarter (Q1 2026), which indicates volatility in the company's ability to generate cash from its operations. Total debt has increased significantly from $2.10B in Q2 2024 to $3.20B in Q1 2026, implying increased leverage. The net income for the latest quarter is $124.8M. While revenue growth is a positive sign, the fluctuating margins, variable cash flow, and increasing debt warrant caution. The selling, general, and administrative expenses for the latest quarter were $473.9M.

The company presents a moderately bullish investment profile based on its key metrics and financial ratios. Revenue has shown positive growth, indicating a healthy demand for its products or services. The gross margin has remained relatively stable, suggesting efficient cost management. The Return on Equity (ROE) indicates a solid return for shareholders. The Price-to-Earnings (P/E) ratio suggests the company is appropriately valued by the market. The debt-to-equity ratio has seen a decrease, showcasing the company's improved financial leverage. The current ratio signifies the company's strong ability to meet its short-term obligations. Overall, the company demonstrates a stable and growing business model with a healthy balance sheet, making it a moderately attractive investment for the next 6-12 months.