CACI (CACI)

Defense, intelligence, and IT solutions provider CACI International (NYSE:CACI) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 11.2% year on year to $2.29 billion. On the other hand, the company’s full-year revenue guidance of $9.3 billion at the midpoint came in 0.5% below analysts’ estimates. Its non-GAAP profit of $6.85 per share was 10.9% above analysts’ consensus estimates.

Company Overview

Founded to commercialize SIMSCRIPT, CACI International (NYSE:CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

Competitors in the defense, intelligence, and IT solutions sector include Leidos (NYSE:LDOS), SAIC (NYSE:SAIC), and Booz Allen (NYSE:BAH).

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, CACI’s sales grew at a decent 8.8% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. CACI’s annualized revenue growth of 12.9% over the last two years is above its five-year trend, suggesting its demand recently accelerated.

We can better understand the company’s revenue dynamics by analyzing its backlog, or the value of its outstanding orders that have not yet been executed or delivered. CACI’s backlog reached $33.9 billion in the latest quarter and averaged 11.3% year-on-year growth over the last two years. Because this number is lower than its revenue growth, we can see the company fulfilled orders at a faster rate than it added new orders to the backlog. This implies CACI was operating efficiently but raises questions about the health of its sales pipeline.

This quarter, CACI reported year-on-year revenue growth of 11.2%, and its $2.29 billion of revenue exceeded Wall Street’s estimates by 1%.

Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and indicates its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.

CACI’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 8.6% over the last five years. This profitability was higher than the broader industrials sector, showing it did a decent job managing its expenses.

Looking at the trend in its profitability, CACI’s operating margin might fluctuated slightly but has generally stayed the same over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, CACI generated an operating margin profit margin of 9.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

CACI’s EPS grew at a remarkable 12.3% compounded annual growth rate over the last five years, higher than its 8.8% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

Diving into the nuances of CACI’s earnings can give us a better understanding of its performance. A five-year view shows that CACI has repurchased its stock, shrinking its share count by 13%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For CACI, its two-year annual EPS growth of 20.6% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, CACI reported adjusted EPS of $6.85, up from $5.93 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects CACI’s full-year EPS of $27.43 to grow 5.2%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

CACI has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6.7% over the last five years, slightly better than the broader industrials sector.

Taking a step back, we can see that CACI’s margin dropped by 2 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

CACI’s free cash flow clocked in at $143 million in Q3, equivalent to a 6.2% margin. This result was good as its margin was 5.1 percentage points higher than in the same quarter last year. We hope the company can build on this trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

CACI’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 10.1%, slightly better than typical industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Uneventfully, CACI’s ROIC has stayed the same over the last few years. Rising returns would be ideal, but this is still a noteworthy feat since they're already high.

CACI reported $133 million of cash and $3.20 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.02 billion of EBITDA over the last 12 months, we view CACI’s 3.0× net-debt-to-EBITDA ratio as safe. We also see its $88.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly CACI blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this print was mixed. The stock remained flat at $525 immediately following the results.

Updated: December 4, 2025 at 10:22 PM EST

When considering an investment in CACI, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

There are a lot of things to like about CACI. First off, its revenue growth was good over the last five years. And while its projected EPS for the next year is lacking, its backlog growth has been splendid. On top of that, its remarkable EPS growth over the last five years shows its profits are trickling down to shareholders.

CACI’s P/E ratio based on the next 12 months is 20.7x. Looking at the industrials landscape right now, CACI trades at a pretty interesting price. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $658.91 on the company (compared to the current share price of $605.71), implying they see 8.8% upside in buying CACI in the short term.