CACI International Inc (NYSE:CACI) Passes Key Quality Investing Filters

For investors aiming to assemble a portfolio of durable, high-achieving companies for the long term, the quality investing method provides a structured system. This system centers on finding businesses with lasting competitive strengths, reliable and profitable expansion, and sound financial condition. The "Caviar Cruise" stock scan puts this thinking into practice by selecting for companies with a record of increasing sales and profits, high returns on capital, good cash flow generation, and reasonable debt. The aim is not to locate temporary discounts, but to discover companies designed to increase value over many years.

One company that appears from using this strict scan is CACI International Inc -CL A (NYSE:CACI), a supplier of knowledge and technology for U.S. government national security missions. A detailed look shows how its financial picture matches many central principles of quality investing.

Matching the Main Quality Filters

The Caviar Cruise scan uses particular, measurable filters to search for quality. CACI's financial numbers show a good match with these rules:

• High Return on Invested Capital (ROIC): A central part of quality investing, ROIC calculates how well a company produces profits from its capital. The scan demands an ROIC (leaving out cash, goodwill, and intangibles) over 15%. CACI greatly passes this mark with a solid ROICexgc of 49.88%. This shows very effective capital use and a model that produces high value from each dollar invested, a main feature of a business with competitive strengths.
• Good Profit Quality: Quality investors value earnings supported by actual cash flow. The scan seeks a 5-year average Profit Quality (Free Cash Flow/Net Income) above 75%. CACI performs well here with a number of 116.07%, meaning it has turned more than 100% of its accounting profits into free cash over this time. This high-grade earnings source offers financial options for expansion, debt payment, or shareholder benefits without needing outside funding.
• Reasonable Debt Load: A quality company should not carry too much debt. The scan uses a Debt-to-Free Cash Flow ratio below 5, showing how many years of present cash flow would be required to erase all debt. CACI's ratio of 4.54 falls inside this acceptable zone, pointing to a sensible capital structure where debt is applied carefully and is simple to cover with its good cash production.
• Profitable Expansion: The method looks for companies where profit growth exceeds sales growth, indicating better operational efficiency and pricing ability. While the given 5-year sales CAGR information is not present, CACI's 5-year EBIT (earnings before interest and taxes) CAGR of 11.20% shows a steady history of widening its core operational profit.

Fundamental Condition and Valuation Setting

A wider view of CACI's fundamental report gives a more detailed image. The company gets a moderate total fundamental rating of 5 out of 10, which indicates a varied picture when measured directly against its Professional Services industry group.

• Profitability & Growth: CACI gets a 6 for profitability. It displays good signs for steady historical profitability and cash flow, with margins (Operating Margin of 9.15%, Profit Margin of 5.69%) that beat most of the industry. Its growth score is also a 6, marked by good past growth in both Earnings Per Share (21.16% last year) and Sales (12.61% last year).
• Financial Condition: The company's health score is a neutral 5. Its solvency is firm, with a good Altman-Z score of 3.95 and the Debt/FCF ratio in a reasonable range. One item to note is a rising debt-to-assets ratio compared to a year ago.
• Valuation Points: This is where the report signals care, giving a score of 3. With a Price/Earnings ratio of 22.29, CACI is called "rather expensive" on a pure basis, though it matches its industry average. The Price/Forward Earnings ratio of 18.97 is also viewed as on the high side. For a complete detail, you can examine the full fundamental analysis report for CACI.

Analyst Perspectives and Strategic Place

While the number-based scan emphasizes financial might, quality investing also weighs non-number factors. CACI works in the defense and intelligence technology field, which is defined by long-term government budget cycles and high entry obstacles. This can offer some economic downturn stability and clarity on future income, fitting with the quality investing liking for steady, lasting businesses. The company's attention on distinct technology in fields like signals intelligence and cyber backs the quality rule of having a competitive edge.

Is CACI a Quality Investment Prospect?

CACI International makes a strong argument for quality investors based on the specific Caviar Cruise rules. Its outstanding return on invested capital and excellent cash flow conversion are signs of an effective and valuable business. A history of profitable growth and a reasonable debt amount further support its qualifications. However, investors must balance these positives with the present valuation, which seems high. The quality investing thinking often includes paying a sensible price for a superior business, but the final choice depends on whether CACI's lasting competitive place and growth path support its premium.

For investors wanting to examine other companies that pass the same strict quality filters, the Caviar Cruise scan is a useful first step. You can locate more possible quality investment prospects by seeing the complete scan results here.

Disclaimer: This article is for information only and is not financial advice, a suggestion, or an offer to buy or sell any security. Investing has risk, including the possible loss of principal. You should do your own study and talk with a qualified financial advisor before making any investment choices.