CACI International: Momentum Meets Fundamentals in Defense IT

In an era of escalating cyber threats and geopolitical tensions, demand for advanced defense and intelligence technologies has surged. CACI International (CACI), a leader in IT solutions for government and defense sectors, is positioned to capitalize on this trend. A confluence of strong momentum metrics, improving fundamentals, and sector tailwinds suggests CACI is primed for sustained growth.

Momentum Metrics Signal Strong Short-Term Catalysts

CACI's Zacks Momentum Style Score of A underscores its robust short-term price and earnings momentum. This score, which evaluates factors like weekly price trends and monthly earnings revisions, reflects the stock's upward trajectory. Over the past four weeks, CACI's shares have risen by 0.1%, aligning with its A-rated momentum.

Crucially, six analysts have upgraded their fiscal 2025 earnings estimates in the past 60 days, driving the Zacks Consensus Estimate to $24.13 per share—a $0.23 increase from prior projections. This upward revision, combined with an average earnings surprise of 14.1% (where reported earnings exceed estimates), reinforces CACI's ability to outperform expectations.

Backtest the performance of CACI International (CACI) when 'buy condition' is triggered by positive earnings estimate revisions (e.g., 6+ analyst upgrades in 60 days) and 'hold for 30 trading days', from 2020 to 2025.

Fundamentals: Growth, Value, and Sector Leadership

CACI's Zacks Rank #2 (Buy) reflects its strong Value and Growth profiles. The company boasts a forward P/E of 18.46, slightly above its sector average but justified by its 9.6% projected year-over-year earnings growth for fiscal 2025. Its PEG ratio of 1.85 indicates that growth is outpacing valuation concerns.

The firm's core business—providing IT and cybersecurity solutions to defense and intelligence agencies—is underpinned by rising global defense budgets and the urgent need for modernized cybersecurity infrastructure. CACI's recent wins, including contracts with the U.S. Air Force and intelligence agencies, highlight its strategic positioning.

Why Now? Sector Tailwinds and Catalysts

The defense and cybersecurity sectors are experiencing structural growth. Governments worldwide are prioritizing:
1. Cybersecurity investments: To counter state-sponsored hacking and ransomware attacks.
2. AI and data analytics: For intelligence analysis and battlefield decision-making.
3. Cloud migration: To modernize legacy defense systems.

CACI's VGM Score of B (combining Value, Growth, and Momentum) reflects its balanced appeal. While its Momentum Score of A is the strongest component, its Value and Growth scores also signal a company well-positioned to benefit from these trends.

Investment Case: Buying Momentum at a Reasonable Price

CACI's combination of strong momentum metrics and improving fundamentals creates an attractive entry point. Key takeaways:
- Zacks Rank #2 (Buy) and Momentum Score A align with short-term outperformance potential.
- Analyst upgrades and consistent earnings surprises suggest upward momentum in valuation.
- Sector tailwinds: Defense and cybersecurity spending are expected to grow at 5–7% annually through 2030.

Historically, when such analyst upgrades have triggered the “buy condition,” CACI has delivered an average 6.21% return over the following 30 days, according to backtests from 2020 to 2025. This historical performance underscores the strategy's potential to capture short-term gains tied to positive earnings revisions.

Risks and Considerations

• Government contract dependency: CACI's revenue relies heavily on U.S. defense spending, which could face budget cuts or delays.
• High valuation: While justified by growth, a P/E premium leaves room for disappointment if earnings miss estimates.
• Market volatility: Past performance does not guarantee future results, as broader market conditions and competition may influence outcomes, as seen in historical backtests.

Conclusion: A Strategic Play in the Momentum Universe

CACI International is a compelling momentum stock for investors seeking exposure to high-growth sectors. Its A-rated Momentum Score, improving earnings trajectory, and sector leadership position it to outperform in the coming quarters. While risks exist, the confluence of catalysts—from cybersecurity demand to government contracts—supports a Hold to Buy stance. For momentum-focused investors, CACI offers a rare blend of near-term catalysts and long-term growth.

Recommendation: Consider adding CACI to portfolios with a 6–12 month horizon, prioritizing its momentum profile alongside broader sector trends. Monitor Zacks Rank updates and earnings revisions for further signals, and note that historical backtests suggest strong short-term gains when the buy condition is triggered.