Zacks Industry Outlook Highlights: CACI International, Perficient and Forrester Research

For Immediate Release

Chicago, IL – November 10, 2021 – Today, Zacks Equity Research discusses Computer Services, including CACI International Inc CACI, Perficient, Inc. PRFT and Forrester Research, Inc. FORR.

Link: https://www.zacks.com/commentary/1825632/3-stocks-to-watch-from-the-flourishing-computer-services-industry

Increased adoption and success of the work-from-home trend are enabling the Zacks Computer - Services industry to cater to increasing demand for cloud-enabled software solutions. Also, increasing adoption of digital transformative techniques in healthcare and financial services remains the silver lining for these industry participants. However, the industry is still significantly weak compared with the pre-pandemic level.

CACI International, Perficient and Forrester Research are well-positioned to benefit from the above-mentioned positives. Growing adoption of cyber security solutions, stringent regulatory requirements, digital healthcare and the need for business automation solutions should continue to drive the industry’s growth.

Industry Description

The Zacks Computer - Services industry primarily comprises companies that offer cloud and software-based solutions. Their offerings include national security solutions, business support solutions, and systems engineering as well as software application development solutions.

The industry participants cater to varied end markets and customers including intelligence, defense, U.S. government agencies, communications, banking, financial services, insurance, healthcare, as well as media and entertainment. Consultancy companies in the industry are helping clients in their ongoing digital transformation. They are providing end-to-end services, including application development, integration and maintenance; technology infrastructure management; and business process services.

3 Computer-Services Industry Trends to Watch

Remote Work & Online Learning Trends Boost Prospects: The industry’s growth is expected to accelerate in the days ahead on increasing the number of remote workers in the wake of the coronavirus-induced work-from-home wave. In this era of digital transformation, enterprises are actively seeking a common ground between on-premise and cloud infrastructures that will enable them to provide flexible, as well as easily adoptable hybrid solutions. Coronavirus-induced remote working has led to increased demand for cloud and cost-efficient business support solutions, as well as other digital monetization solutions, which bode well for the industry.

Growing Cyber Attacks is a Tailwind: Increasing number of cyber-attacks and related security risks are expected to keep the industry’s momentum alive. Government agencies are ideal targets for cyber-attacks, as they are entrusted with sensitive information. Therefore, the growing need for cyber security solutions and services in critical areas like defense, intelligence and civilian agencies of the U.S. government bodes well for the industry players.

Regulatory Compliance Drives Demand: The companies in this industry should benefit from increasingly complex network systems, and sensitive information environments in which governments as well as businesses operate. The industry participants are keeping pace with global regulatory and business practice requirements, thereby helping customers incorporate the best practices while complying with governmental and industry norms.

Zacks Industry Rank Indicates Solid Prospects

The Zacks Computer – Services industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #93, which places it in the top 37% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bullish near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic on this group’s earnings growth potential. Since Nov 30, 2020, the industry’s earnings estimates for 2021 have moved up 15.2%.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags Sector and S&P 500

The Zacks Computer – Services industry has underperformed the broader Zacks Computer And Technology sector as well as the S&P 500 Index over the past year.

The industry has returned 32.4% over this period compared with the S&P 500’s increase of 34.1% and the broader sector’s rally of 40.5%.

Industry's Current Valuation

On the basis of forward 12-month P/E, which is a commonly used multiple for valuing computer stocks, we see that the industry is currently trading at 18.54X compared with the S&P 500’s 22.19X and sector’s forward-12-month P/E of 29.53X.

Over the last five years, the industry has traded as high as 25.16X, as low as 13.67X and at the median of 19.41X.

3 Computer-Services Stocks to Watch Right Now

CACI International: This Arlington, VA-based IT applications and infrastructure solutions provider has been benefiting from new business wins and organic expansions. The company has a large pipeline of new projects and continues to win more deals at regular intervals. Furthermore, having the government as a big client lends stability to the business and moderates fluctuations in revenues.

This Zacks Rank #2 (Buy) company continues to generate higher cash flows, mainly driven by growth in billing and collection processes as well as its Master Accounts Receivable Purchase Agreement. CACI continues to expect accelerating organic revenue growth and margin expansion throughout fiscal 2022. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for its fiscal 2022 earnings has moved up 1.8% to $18.53 per share over the past 30 days. The stock has risen 15.9% year to date.

Perficient – This Zacks Rank #2 company is riding on an expanding customer base. Strong demand for Perficient’s global delivery model (40% of delivery resources are offshore) has been a key catalyst. Markedly, in third-quarter 2021, the company booked 80 deals greater than $500K compared with 66 deals in the year-ago quarter.

The consensus mark for fiscal 2021 earnings has jumped 48% to $3.12 per share over the past 30 days. The stock has risen 211.8% year to date.

Forrester Research: This Cambridge, MA-based company is riding on strong growth in contract value and solid client retention rate. This Zacks Rank #2 company is benefiting from strong demand for its Research product. Forrester Decisions, launched in August, has also gained significant traction within a short span of time.

The Zacks Consensus Estimate for its fiscal 2021 earnings has been steady at $1.81 per share over the past 30 days. The stock has risen 40.1% year to date.

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CACI International, Inc. (CACI) : Free Stock Analysis Report
 
Forrester Research, Inc. (FORR) : Free Stock Analysis Report
 
Perficient, Inc. (PRFT) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research