Why CACI International Plunged

Updated

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of CACI International (NYS: CACI) , an information technology and professional service provider primarily to the U.S. government, dipped 14% today after it reported disappointing third-quarter results.

So what: For the quarter, CACI International reported a 31% increase to adjusted EPS to $1.45 on a 1.6% increase in year-over-year revenue with a 16% increase in contract awards being the primary growth driver. Despite the $0.01 EPS beat, revenue came in below Wall Street's expectations. CEO Paul Cofoni said, "We are ... experiencing the effects of budget uncertainty on our customers, leading to slower-than-anticipated procurement actions that are affecting our revenue growth." Unsurprisingly, CACI's revenue forecast going forward also missed Wall Street's expectations.


Now what: As icing on the cake, Credit Suisse downgraded CACI International to neutral from outperform this morning. I can't say I disagree much with Credit Suisse's assessment given that the U.S. government is actively looking for ways to cut costs as budget uncertainties are bound to take a toll on companies just like CACI. At just nine times forward earnings the company is beginning to look attractive, but there's still too much budget uncertainty to be optimistic about its prospects over the next couple of quarters.

Craving more input? Start by adding CACI International to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time thisarticle was published Fool contributorSean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement