Why CACI International (CACI) is a Top Value Stock for the Long-Term

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It doesn't matter your age or experience: taking full advantage of the stock market and investing with confidence are common goals for all investors. Luckily, Zacks Premium offers several different ways to do both.

Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.

It also includes access to the Zacks Style Scores.

What are the Zacks Style Scores?

Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.

Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.

Growth Score

Growth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

What if you like to use all three types of investing? The VGM Score is a combination of all Style Scores, making it one of the most comprehensive indicators to use with the Zacks Rank. It rates each stock on their combined weighted styles, which helps narrow down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: CACI International (CACI)

Based in Reston, VA, CACI International delivers IT applications and infrastructure to improve communications and secure the integrity of information systems and networks, enhance data collection and analysis, and increase efficiency and mission effectiveness. The company’s solutions enrich defense and intelligence capabilities, assure homeland security, improve decision-making, and help customers operate smartly and proficiently.

CACI is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.

It also boasts a Value Style Score of B thanks to attractive valuation metrics like a forward P/E ratio of 23.28; value investors should take notice.

For fiscal 2025, five analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.27 to $23.30 per share. CACI boasts an average earnings surprise of 7.4%.

With a solid Zacks Rank and top-tier Value and VGM Style Scores, CACI should be on investors' short list.

Zacks Investment Research

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

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Zacks Industry Outlook CACI International, CSG Systems International and Innodata

Zacks

For Immediate Release

Chicago, IL – November 13, 2024 – Today, Zacks Equity Research like CACI International CACI, CSG Systems International CSGS and Innodata INOD.

Industry: Computer Services

Link: https://www.zacks.com/commentary/2368950/3-stocks-to-buy-from-the-prospering-computer-services-industry

The rising adoption of digital transformative techniques in healthcare and financial services has been a silver lining for industry participants. The growing need for consulting, research and cyber-security solutions, stringent regulations, digital healthcare and the growing adoption of business automation solutions is likely to continue driving the industry’s prospects.

Industry Description

Consultancy companies in the industry are helping clients in their ongoing digital transformation. They provide end-to-end services, including application development, integration and maintenance, technology infrastructure management and business process services.

3 Computer-Services Industry Trends to Watch

Remote & Hybrid Work Trends Boost Prospects: The industry’s growth is expected to accelerate in the days ahead based on an increasing number of remote and hybrid workers. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructures, enabling them to provide flexible and easily adaptable hybrid solutions. The growing remote-working trend has led to increased demand for cloud and cost-efficient business support solutions, as well as other digital monetization solutions, which bode well for the industry.

Growing Cyber Attacks are Creating a Tailwind: The increasing number of cyber-attacks and related security risks are expected to keep the industry’s momentum alive. Government agencies are ideal targets for cyber-attacks, as they are entrusted with sensitive information. Therefore, the growing need for cyber security solutions and services in critical areas like defense, intelligence and civilian agencies of the U.S. government bodes well for industry players.

Regulatory Compliance Drives Demand: The companies in this industry are likely to benefit from increasingly complex network systems and sensitive information environments in which governments and businesses operate. The industry participants are keeping pace with the global regulatory and business practice requirements, thereby helping customers incorporate the best practices while complying with governmental and industry norms.

Zacks Industry Rank Indicates Bullish Prospects

The Zacks Computer – Services industry is housed within the broader Zacks Computer and Technology sector. It currently carries a Zacks Industry Rank #73, which places it in the top 29% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Given the bullish industry outlook, there are a number of stocks worth buying currently. But before we present those stocks, let’s take a look at the industry’s recent stock market performance and valuation.

Industry Lags Sector and S&P 500

The Zacks Computer – Services industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 Index over the past year.

The industry has risen 27.4% over this period compared with the S&P 500’s appreciation of 36% and the broader sector’s return of 40.3%.

Industry's Current Valuation

On the basis of forward 12-month P/E, which is a commonly used multiple for valuing computer stocks, we see that the industry is currently trading at 20.29X compared with the S&P 500’s 22.66X and the sector’s forward-12-month P/E of 27.35X.

Over the last five years, the industry has traded as high as 20.29X and as low as 13.14X, with a median of 16.21X.

3 Computer-Services Stocks to Buy Right Now

Innodata: This Zacks Rank #1 (Strong Buy) company is benefiting from strong demand for generative AI training data. Increasing demand for Agility is notable. You can see the complete list of today’s Zacks #1 Rank stocks here.

Innodata now expects 2024 revenues to grow between 88% and 92% compared with its previous guidance of 60% growth.

The Zacks Consensus Estimate for INOD’s 2024 earnings has been steady at 21 cents per share over the past 30 days. The stock has surged 464% year to date.

CSG Systems International: This Zacks Rank #2 (Buy) company is benefiting from new logo sales wins and deal expansions.

CSGS now expects to deliver organic revenue growth for 2024 in line with its long-term guidance of 2% to 6%. It is benefiting from strong performance from its top two customers, Charter and Comcast.

CSG recently announced that it has extended its contract with Comcast through year-end 2030.

The Zacks Consensus Estimate for CSGS’ 2024 earnings has increased by a couple of cents to $4.28 per share over the past 30 days. The stock has returned 5.6% in the year-to-date period.

CACI International: This Reston, VA-based IT applications and infrastructure provider is benefiting from new business wins and organic expansions. This Zacks Rank #2 company’s disciplined business development actions, consistent operational excellence and high customer satisfaction help it win new deals regularly.

CACI’s sustained focus on its strategy to grow in larger markets and leverage mergers and acquisitions to further increase its market share and create long-term value for its shareholders is praiseworthy.

The Zacks Consensus Estimate for CACI’s fiscal 2025 earnings has increased by four cents to $23.17 per share over the past 30 days. The stock has returned 76.8% in the year-to-date period.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Risk Warnings and Disclaimers

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Jury Finds Us Defense Contractor Liable In Torture At Abu Ghraib Prison

Reuters

CACI International

-9.41%

Risk Warnings and Disclaimers

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Market Chatter: CACI International Fined $42 Million for Role in Abu Ghraib Detainee Abuse

MT Newswires

CACI International

-9.41%

Risk Warnings and Disclaimers

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3 Stocks to Buy From the Prospering Computer-Services Industry

Zacks

The Zacks Computer - Services industry is suffering from broader macroeconomic challenges that have resulted in an elongated sales cycle, lower conversion rates and customer delays in making purchase decisions. However, industry participants like CACI International CACI, CSG Systems International CSGS, and Innodata INOD are riding on the ongoing digital transformation, which is increasing the demand for cloud-enabled software solutions. The rising adoption of digital transformative techniques in healthcare and financial services has been a silver lining for industry participants. The growing need for consulting, research and cyber-security solutions, stringent regulations, digital healthcare and the growing adoption of business automation solutions is likely to continue driving the industry’s prospects.

Industry Description

The Zacks Computer - Services industry primarily comprises companies that offer cloud and software-based solutions. Their offerings include consulting and research solutions, security solutions, business support solutions, systems engineering, and software application development solutions. The industry participants cater to varied end markets and customers, including intelligence, defense, U.S. government agencies, communications, banking, financial services, insurance, healthcare, and media and entertainment. Consultancy companies in the industry are helping clients in their ongoing digital transformation. They provide end-to-end services, including application development, integration and maintenance, technology infrastructure management and business process services.

3 Computer-Services Industry Trends to Watch

Remote & Hybrid Work Trends Boost Prospects: The industry’s growth is expected to accelerate in the days ahead based on an increasing number of remote and hybrid workers. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructures, enabling them to provide flexible and easily adaptable hybrid solutions. The growing remote-working trend has led to increased demand for cloud and cost-efficient business support solutions, as well as other digital monetization solutions, which bode well for the industry.

Growing Cyber Attacks are Creating a Tailwind: The increasing number of cyber-attacks and related security risks are expected to keep the industry’s momentum alive. Government agencies are ideal targets for cyber-attacks, as they are entrusted with sensitive information. Therefore, the growing need for cyber security solutions and services in critical areas like defense, intelligence and civilian agencies of the U.S. government bodes well for industry players.

Regulatory Compliance Drives Demand: The companies in this industry are likely to benefit from increasingly complex network systems and sensitive information environments in which governments and businesses operate. The industry participants are keeping pace with the global regulatory and business practice requirements, thereby helping customers incorporate the best practices while complying with governmental and industry norms.

Zacks Industry Rank Indicates Bullish Prospects

Industry Lags Sector and S&P 500

The Zacks Computer – Services industry has underperformed the broader Zacks Computer and Technology sector and the S&P 500 Index over the past year.

The industry has risen 27.4% over this period compared with the S&P 500’s appreciation of 36% and the broader sector’s return of 40.3%.

One-Year Price Performance

Industry's Current Valuation

Over the last five years, the industry has traded as high as 20.29X and as low as 13.14X, with a median of 16.21X, as the charts below show.

Forward 12-Month Price-to-Earnings (P/E) Ratio

3 Computer-Services Stocks to Buy Right Now

Innodata now expects 2024 revenues to grow between 88% and 92% compared with its previous guidance of 60% growth.

The Zacks Consensus Estimate for INOD’s 2024 earnings has been steady at 21 cents per share over the past 30 days. The stock has surged 464% year to date.

Price and Consensus: INOD

CSG Systems International: This Zacks Rank #2 (Buy) company is benefiting from new logo sales wins and deal expansions.

CSGS now expects to deliver organic revenue growth for 2024 in line with its long-term guidance of 2% to 6%. It is benefiting from strong performance from its top two customers, Charter and Comcast.

CSG recently announced that it has extended its contract with Comcast through year-end 2030.

The Zacks Consensus Estimate for CSGS’ 2024 earnings has increased by a couple of cents to $4.28 per share over the past 30 days. The stock has returned 5.6% in the year-to-date period.

Price and Consensus: CSGS

The Zacks Consensus Estimate for CACI’s fiscal 2025 earnings has increased by four cents to $23.17 per share over the past 30 days. The stock has returned 76.8% in the year-to-date period.

Price and Consensus: CACI