November 26, 2008 - CACI International, Inc. (CAI-NYSE) provides information systems, and technology and professional services primarily to the United States government. Its services include enterprise IT and network services, such as design, establishment, management, security, and operation of client infrastructure, as well as operational, analytic, consultancy, and transformational services; data, information, and knowledge management services; and business system solutions that consist of consulting and software development/integration services for requirements in the financial, procurement, human resources, supply chain, and other business domains.

In addition, CACI International provides information assurance, information operations, and cyber security services that address cyber threats; integrated security and intelligence solutions that close gaps between security, intelligence, and law enforcement; and program management and system engineering and technical assistance(SETA) services to government program offices. Additionally, it offers planning, designing, implementing, and managing solutions that resolve specific technical or business needs for commercial and government clients in the telecommunications, education, financial services, healthcare services, and transportation sectors internationally. The company, formerly known as CACI Worldwide, Inc., was founded in 1962 and is headquartered in Arlington, Virginia.

With a new incoming administration that already declared an attack on excesses in federal government budgets, the need for CACI's expertise to increase efficiencies will only grow. And as security concerns require more solutions, CACI's security expertise will see increased demand. It's a company in the right place at the right time, even with an economy that is slowing and fraught with problems.

Earnings seem to be back on track for CACI. They slipped a little for 2 years, going from $2.79 a share in 2005, then to $2.72 because of stock options expenses which reduced eps by 22 cents, then down again to $2.51 in 2007. For 2008, eps bounced back to $2.72 (fiscal year ends June 30). The 16 analysts who follow the company have an average estimate of $3.02 for 2009 (with a range of $2.98 to $3.19) and $3.35 for 2010 (with a range between $3.12 and $3.76).

Revenues have been jumping. they were up 18% in the September quarter when compared to the same quarter last year, led by new orders from clients needing more intelligence and security for defense and anti-terrorism concerns. Part of the increase in sales came from new acquisitions and the remainder from internal growth. Department of Defense contracts were up 21%. Federal civilian agency sales gained 12%. The civilian sector ordered more information technology services to help increase efficiencies at government offices. While sales were up 18%, earnings increased by 15%, hurt by a higher tax rate, going from 60 cents to 69 cents a share.

The new president has vowed to continue the war against terrorism, looking toward Afghanistan as the main battlefield. That suggests no decrease in defense spending even if Iraq withdrawal happens. Furthermore, the Department of Defense (DOD) continually needs to update its information technology infrastructure, an area where CAI already has large contracts.

Contract orders in the September quarter showed strong improvement, up 33% compared to the same quarter last year, increasing to $943 million. That puts the book to bill ratio at 1.4. Funded backlog went higher by 22% to $1.7 billion. Some of the contracts: $260 million from DOD, $406 million for intelligence, $150 million from the Naval Sea Systems Command, and $187 million from the Army. On November 10, it announced a new $60 million contract with the Army.

Here's another recent (Nov 12) contract: CACI International Inc. received three contracts totaling $30 million for medical logistics contracts for the DefenseDepartment. The contracts continue the defense and homeland security contractor's work with the Defense Medical Logistics Standard Support system at the Joint Medical Logistics Functional Development Center in Fort Detrick, Md., the company said.

The system gives medical logistics, facility management and medical maintenance support for U.S.Armed Forces worldwide, including in Afghanistan and Iraq. The awards effectively double CACI's current medical logistics work at the center in Fort Detrick.

More numbers: Market Cap is $1.29 billion. Trailing P/E is 15.33 while the forward P/E is 12.85. Price to Sales is .5. Price to Book is 1.39. Operating margin for the last 12 months was 6.72% with a Profit margin of 3.41%. Revenues for the prior 12 months were $2.52 billion. There's $112 million in cash in the bank. Current ratio is 2.188. Book Value is $30.63. There is no dividend. Beta is .98. The 52-week range was $53.95 to $36.02. There are 29.90 million shares outstanding. Insiders own 11.35%.

CACI is almost immune to the economy (except if tax revenues decrease to such a level that all government spending is reduced). Its main client is the Federal government with a strong emphasis on the Department of Defense. It should continue to grow earnings while most other companies are having a hard time shoring up losses. Spend more time with this stock, and it should be rewarded.

Company Web site: www.caci.com

- Ted Allrich