Robust Government Funding And Digital Transformation Will Expand Addressable Markets

Key Takeaways

• Expanding government funding and rapid tech adoption are increasing CACI's market opportunities, revenue growth, and contract quality in national security and defense.
  
• Strategic acquisitions and sustained digital transformation initiatives strengthen CACI's competitive positioning, margin expansion, and long-term contract visibility.
  
• Heavy dependence on U.S. government contracts, rising competition, operational challenges, and workforce pressures create risks for growth, margins, and earnings stability.

Catalysts

Through its subsidiaries, provides expertise and technology solutions in the United States, the United Kingdom, rest of Europe, and internationally.

• Robust and growing government funding in national security, border protection, and defense technology-particularly from recent legislative acts (like the $150B+ for defense and $170B for border security)-is providing a favorable backdrop and increasing CACI's addressable market, supporting sustained revenue growth and backlog expansion.
  
• 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.
  
• The ongoing consolidation of government legacy systems and rising demand for digital transformation (as exemplified by CACI's role in Army system consolidation and NASA NCAPS implementation) position the company to capture more long-term, mission-critical contracts, enhancing both revenue visibility and net margins.
  
• CACI's strategic acquisition activity focuses on high-margin, technology-driven niches like cyber, electronic warfare, and AI, steadily improving its revenue mix, differentiating its offerings, and delivering incremental expansion in EBITDA and earnings over time.
  
• Structural trends including rising regulatory complexity, talent scarcity in cleared roles, and increasing government shift toward outcome-based contracting and longer-term relationships, reinforce CACI's competitive moat, supporting pricing power and improved free cash flow conversion.

CACI International Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming CACI International's revenue will grow by 6.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 5.8% today to 6.1% in 3 years time.
• Analysts expect earnings to reach $634.1 million (and earnings per share of $30.96) by about September 2028, up from $499.8 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.1x on those 2028 earnings, up from 21.1x today. This future PE is lower than the current PE for the US Professional Services industry at 26.3x.
• Analysts expect the number of shares outstanding to decline by 1.85% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.57%, as per the Simply Wall St company report.

CACI International Future Earnings Per Share Growth

Risks

• CACI's heavy reliance on U.S. government defense and intelligence budgets (90%+ of revenue) exposes the company to budget volatility, government shutdowns, and political gridlock-any prolonged reduction or delay in federal spending could lead to significant revenue and earnings instability.
  
• While CACI emphasizes its differentiation and selective bidding, the text points to industry-wide competition for high-value contracts and "takeaway work"-heightened competition from larger or aggressively priced peers could compress margins and reduce win rates, impacting both revenue growth and net margins.
  
• The company acknowledges recent supply chain and manufacturing issues that slowed production in its space/optical terminal business; persistent execution risks or inability to ramp production could limit top-line growth in emerging areas, especially as volume-based defense tech offerings become more important to margins and revenue.
  
• Contracting officer workforce reductions and increasing focus on contract and systems consolidation in government procurement may delay contract awards and introduce uncertainty in business development cycles, potentially slowing backlog conversion, impacting quarterly revenue timing, and leading to lumpier or unpredictable earnings and free cash flow.
  
• Talent shortages and rising wage costs in the cleared workforce, especially for cyber, analytics, and AI, could drive up costs and turnover rates, leading to operational pressures, lower utilization rates, and reduced profitability over time-this industry-wide trend could hamper CACI's ability to maintain margin expansion and stable earnings.

Valuation

• The analysts have a consensus price target of $563.583 for CACI International based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $10.4 billion, earnings will come to $634.1 million, and it would be trading on a PE ratio of 22.1x, assuming you use a discount rate of 7.6%.
• Given the current share price of $479.62, the analyst price target of $563.58 is 14.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.