CACI INTERNATIONAL INC /DE/ (CACI) stock intrinsic value fair value estimate & owner earnings analysis

CACI International sells information technology, cyber, intelligence-analysis and mission-support services almost entirely to the U.S. government (95.6% of fiscal 2026 revenue; fiscal years end June 30). By customer, the Department of War is 53.6% of revenue, the intelligence community 24.6%, federal civilian agencies 17.4%, and commercial and other customers (including its UK business) 4.4%. Revenue grew from $6.04 billion in fiscal 2021 to $9.57 billion in fiscal 2026, helped by organic growth of 6.1%, 13.7%, 7.2% and 7.2% in fiscal 2023 through 2026 and by acquisitions. Total backlog was $32.0 billion at June 30, 2026, up only 1.9% from $31.4 billion in a year that included $2.6 billion of acquisitions, and only $5.4 billion of it is funded. HOW WE MEASURED EARNINGS. We use owner earnings: operating cash flow, less swings in working capital, less stock-based compensation (a real cost), less the maintenance part of capital spending. Per diluted share this was $18.64 (fiscal 2022), $13.83, $20.40, $27.47 and $37.33 (fiscal 2026). Because CACI now carries far more debt, we value the business before its lenders are paid (adding back cash interest, which rose from $93.4 million in fiscal 2024 to $213.6 million in fiscal 2026) and then subtract the debt. Two judgements matter. First, fiscal 2026 cash flow includes a one-time $145.4 million tax-timing benefit: the 2025 tax law let CACI recover previously capitalized R&D costs sooner, reversing $222.8 million of tax drag over fiscal 2023 to 2025. We exclude that benefit from the earnings level. Second, CACI bought $4.3 billion of businesses in fiscal 2025 and 2026 (the largest, ARKA, closed March 9, 2026), so earlier years describe a smaller company; we measure the level from fiscal 2025 and 2026 only. STARTING LEVEL. Business cash flow before interest was $33.95 per share in fiscal 2025 and $40.41 in fiscal 2026 after removing the tax benefit (about $46.96 as reported). Stripping out the partial-year contribution of ARKA and Datalynx, the underlying median is $36.20. Those two acquisitions added $166.8 million of revenue and $17.4 million of net income (after $26.0 million of non-cash intangible amortization) in their first ~3.7 months. Adding back the amortization and annualizing gives about $140 million a year, or $6.32 per share, versus $1.96 already in fiscal 2026. Owning the business for a full year is not growth, so the starting level is $42.52 per share (about $0.94 billion). Trailing growth: fiscal 2026 owner earnings per share rose 35.9% as reported, or about 19% for business cash flow after removing the tax benefit. Our base case assumes 0% growth in year 1 beyond the full-year effect of ARKA, and 3% afterwards, below the trailing rate. DEBT. CACI owes $4.93 billion: revolver $660 million and Term Loan A $1.23 billion (both due November 2030), Term Loan B $739 million (October 2031), Term Loan B-2 $798 million and $1.5 billion of 6.375% senior notes (both 2033). With $192 million of cash, net debt is $4.74 billion, or $213.7 per share on 22.18 million diluted shares, about four times operating profit before depreciation and amortization. About $3.4 billion floats with interest rates. The average cost is about 5.5%, close enough to our 6% discount rate that we made no adjustment. Scheduled repayments are modest ($46.8 million, $62.4 million and $78.0 million in fiscal 2027 to 2029) and nothing large falls due before November 2030, so we did not assume a refinancing failure in any case. Every case produces several times its interest bill. BASE CASE ($448 per share). The business starts at $42.52 per share, grows 3% a year for four years and 2% a year for five (to $52.84 in year 10), stays flat for five more years, then declines 5% a year. Growth credited: modest organic expansion, well below the 6% to 14% CACI has delivered in each of the last four years, supported by $32.0 billion of backlog (about 3.3 years of revenue). Persistence after year 10 rests on CACI's long record of winning recompetes of its government contracts; a fade follows because acquired customer relationships wear off (intangible amortization was $168 million in fiscal 2026, and it is added back, so the wearing-off is carried here instead). Left out: any future acquisitions (recent deals were large and debt-funded, not small steps funded from cash), share gains, new programs and margin expansion. The business is worth about $663.8 per share ($14.7 billion); it owes $213.7 per share net, and a $42 million court judgment (see below) costs $1.9 per share, leaving $448.2. BEAR CASE ($252 per share). Three named pressures: federal civilian agencies are 17.4% of revenue ($1.66 billion) and we assume a quarter of it is lost, worth about $1.75 per share of cash flow; total backlog barely grew in a year with $2.6 billion of acquisitions, which suggests organic backlog is not growing; and the company itself says price remains an important factor in bids. The starting level is $40.77, cash flow slips 1% a year for nine years (to $37.24 in year 10), then falls 5% a year. The business is worth $467.9 per share ($10.4 billion); net debt is $213.7 and a $50 million litigation cost is $2.3 per share, leaving $251.9. The debt is still comfortably serviced in this case. BULL CASE ($664 per share). CACI keeps executing at close to its demonstrated organic pace, tapered: 6% a year for four years and 4% for five (to $65.31), flat for ten more years, then a 3% annual decline, and the litigation is dismissed. The business is worth $878.0 per share ($19.5 billion); net debt is $213.7, leaving $664.3. LITIGATION. In November 2024 a jury awarded $42 million against CACI in the Al Shimari case (Abu Ghraib detainee claims); the appeals court affirmed on March 12, 2026 in a 2-1 decision, no amount has been recorded, and CACI is asking the court to dismiss following a June 2026 Supreme Court decision in Cisco v. Doe. We deduct $42 million in the base case, $50 million with interest in the bear case and nothing in the bull case. CHANGE FROM OUR AUGUST 2026 ESTIMATE ($175 / $440 / $750). The earlier work used net income plus depreciation less capex with discount rates of 8% to 9.5%. We now use cash-based owner earnings, a flat 6% discount rate, and subtract debt explicitly. The result is mixed: the bear case is higher, the base case is about the same, and the bull case is lower. WHAT WOULD MAKE THIS ESTIMATE WRONG. A sustained cut in defense or intelligence budgets, lost recompetes on large programs, or ARKA earning less than its first months suggest would lower all three cases; a fall in interest rates or faster organic growth would raise them. Our checks confirmed that the cash-flow statement ties to reported operating cash flow in each of the ten years used.