Is Now the Right Moment to Reconsider CACI International After Recent 2.2% Stock Drop?

If you’re wondering whether now’s the time to make a move on CACI International stock, you’re not alone. It’s a name that’s weathered the market’s ups and downs, mixing short-term dips with some eye-popping multi-year growth. Over just the last week, the stock dipped by 2.2%, which caught a few investors off guard. But if we zoom out a bit, CACI is up 3.7% in the last month, and the long-term trend is even stronger, with a staggering 94.6% gain over three years and a 142.6% jump over the past five. Clearly, there’s a story here that goes beyond the daily noise—a story that’s caught the attention of long-term investors and value seekers alike.

Of course, these kinds of gains invite a critical question: is CACI International still undervalued, or has the train already left the station? According to our valuation framework, CACI scores a 5 out of 6 using key metrics, signaling that it remains undervalued on most fronts. That sort of score is rare among stocks that have already posted such hefty long-term returns, hinting that the market might not be fully recognizing what CACI brings to the table.

We’ll break down what’s driving this strong valuation rating, looking at how CACI stacks up on several classic measures. And stick around, as there is an even more insightful way to understand whether the stock’s true value has surfaced yet. We’ll get to that by the end of the article.

CACI International delivered -2.4% returns over the last year. See how this stacks up to the rest of the Professional Services industry.

Approach 1: CACI International Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting its expected future cash flows and then discounting those cash flows back to today’s dollars. It is a method widely used by value-focused investors for its focus on fundamentals rather than market swings.

For CACI International, the current Free Cash Flow (FCF) stands at $474.6 Million. Analysts see steady growth ahead, projecting FCF to rise to $795.9 Million by 2028. Beyond that, further increases are extrapolated, with estimates exceeding $1 Billion within the next decade. These cash flow forecasts are all denominated in US dollars.

Based on these projections, the DCF model calculates a fair value for CACI of $786.91 per share. This implies the stock is trading at an intrinsic discount of 34.6% relative to where it should be, suggesting CACI is currently undervalued in the market. If the projections hold, there appears to be significant upside potential from current levels.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for CACI International.

Our Discounted Cash Flow (DCF) analysis suggests CACI International is undervalued by 34.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: CACI International Price vs Earnings

The Price-to-Earnings (PE) ratio is often the go-to valuation tool for established, profitable companies like CACI International. This multiple helps investors quickly gauge how much they are paying for each dollar of profit. It is especially relevant for mature companies that consistently generate earnings. Growth prospects and company-specific risks are important here; faster-growing or less-risky businesses usually justify a higher PE ratio.

Currently, CACI trades at a PE ratio of 22.6x. For context, the average PE across the Professional Services industry is 25.2x, with key peers averaging even higher at 33.9x. This places CACI below both its direct competitors and the broader industry norm, suggesting that the stock is not commanding a premium despite solid performance.

To get a more nuanced perspective, Simply Wall St uses a proprietary “Fair Ratio,” in this case 25.8x, to reflect what would be justified based on CACI’s growth outlook, profit margins, size, and risk profile. Unlike straight industry or peer comparisons, the Fair Ratio accounts for characteristics unique to CACI and provides a clearer benchmark for valuation. Guided by this approach, CACI’s current PE is meaningfully below its Fair Ratio, signaling that the stock appears undervalued on this important measure.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your CACI International Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply the story behind the numbers. It is a flexible, personal way for you to share your perspective on a company by outlining what you believe about its future revenue, margins, and fair value. Narratives connect these beliefs to an actionable forecast and then to a clear estimate of fair value, allowing you to see not just the “what,” but the “why” behind an investment case.

On Simply Wall St’s Community page, used by millions of investors, Narratives make it easy for you to build and compare your thesis to others and see how Fair Value stacks up against the current Price. They help you clarify when to buy or sell, and because Narratives update automatically with new earnings or news, your outlook stays current and relevant. For example, one investor might build an optimistic Narrative for CACI International, focusing on expanding government funding and digital transformation and arrive at a high fair value; another could emphasize competition, margin pressures, and budget risks, resulting in a far lower estimate.

Do you think there's more to the story for CACI International? Create your own Narrative to let the Community know!

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