Is CACI's $1 Billion Debt Splash a Smart Play or a Risky Gamble?

Investors, listen up: CACI International (NYSE: CACI) just pulled off a $1.0 billion senior notes offering—pricing its 2033 maturity at 6.375%—and it’s sending shockwaves through the defense and cybersecurity sectors. Is this a bold strategic move to fuel growth, or a sign of overleveraging in a tightening market? Let’s break it down.

The Debt Deal: A Vote of Confidence or a Costly Gamble?

First, the math: CACI priced $1.0 billion in unsecured senior notes due 2033 at 6.375%, up from the initial $750 million offering. The shares dipped just 0.01% post-announcement, but the real story is the demand. This upsized deal signals investors are willing to bet on CACI’s future cash flows—even at a 6.375% coupon.

Why does this matter? CACI plans to use the proceeds to pay down its revolving credit facility, improving its liquidity (current ratio: 1.58) and lowering short-term debt. But here’s the key: this move isn’t just about refinancing—it’s about repositioning.

The Strategic Rationale: Cash is King, but So Are Contracts

CACI isn’t just sitting on cash; it’s deploying it aggressively. Third-quarter revenue hit $2.2 billion (+11.8% YoY), with bookings soaring to $1.2 billion—including a $238 million space tech contract and a $131 million DoD/IC data deal. The company’s $17 billion bid pipeline screams confidence in winning future contracts.

The 6.375% interest rate, while not cheap, is a steal compared to the returns these projects could generate. CACI’s adjusted EPS jumped 36% YoY to $5.95 in Q2, and its EBITDA surged 36.2% to $232.9 million. If it’s growing margins and backlog (now $31.8 billion), this debt isn’t a crutch—it’s rocket fuel.

Valuation: Is CACI Overpriced, or Poised to Dominate?

Let’s get real: CACI’s stock trades at a P/E of ~19.5x, slightly above its 5-year average. But consider this: peers like Raytheon (RTX) and Lockheed Martin (LMT) trade at similar or lower multiples, yet CACI’s growth is faster.

CACI’s focus on high-margin software (e.g., Azure Summit’s cloud deals) and cybersecurity (Applied Insight’s cyber solutions) gives it a tech edge peers lack. If the defense sector trends toward software-defined systems, CACI’s valuation could look cheap fast.

The Risks: Debt, Rates, and Uncle Sam’s Wallet

No free lunch here. The 2033 maturity means rising rates could squeeze future interest costs. The 6.375% coupon is fixed, so that’s locked in—but refinancing later debt in a higher-rate environment could bite.

Then there’s the government factor: 98% of CACI’s revenue comes from U.S. defense and intelligence contracts. A budget showdown or a pivot away from tech spending could crimp growth. And don’t forget: the $1.0 billion in new debt adds to its total, which now stands at ~$3.8 billion.

The Bottom Line: Buy, Sell, or Hold?

Here’s the Cramer call: Buy the dip.

Why?
1. Strong execution: CACI’s Q3 beat estimates, and it raised guidance to $8.55–8.65B in revenue and $24.24–24.87 in EPS.
2. Strategic use of debt: Paying down revolving credit (which likely carries higher rates) is a no-brainer.
3. Market tailwinds: Cybersecurity spending is projected to hit $445 billion by 2030, and CACI’s tech stack is squarely in the crosshairs.

The risks are real, but CACI’s cash flow (free cash flow grew 18% YoY in Q2) and diversified contract pipeline give it a cushion. If you’re in growth stocks, this is a name to own—not just for defense exposure, but for its tech leadership.

Final Verdict: This Is a Growth Investor’s Play

The $1.0 billion notes aren’t a red flag—they’re a green light. CACI is leveraging its strength to outpace peers in a sector primed for tech-driven growth. If you can stomach the debt load and geopolitical risks, this is a stock to buy now. Just don’t blink—because in this market, the next move could be to $500… or beyond.

Action Plan:
- Buy CACI on dips below $475.
- Set a stop at $450 to protect against defense spending cuts.
- Target $535 (Cantor’s price target) if growth hits full stride.

The verdict? This isn’t a gamble—it’s a calculated bet on the future of national security tech. Get in while you can.