NCI Inc (NASDAQ:NCIT) Moves Up Smartly
NCI Inc (NASDAQ:NCIT) an IT services and solutions provider for the various governmental organizations is showing big tick in today’s trading session as the stock is up by more than 25% Stock moved higher after Program Executive Office for Enterprise Information Systems Intelligence awarded a new contract of $9 million to the company. The current portfolio of NCI Inc (NASDAQ:NCIT) is already catering to a wide range of Information Technology, Defense, Civilian, and Healthcare agencies in the Government sector.
Under the new contract the NCI Inc (NASDAQ:NCIT) will be playing a strategic role in the mobilization and critical inter-operability activities of the Army Reserve Component. The contract awarding authority is project director Reserve Component Automation System. The role of the company in the RCAS project includes advisory services for program engineering of the product, quality assurance, and facilitation of updating and modernization of the RCAS.
Aside from this contract the company enjoys a strong and consistent revenue base from its five year long project with the Army National Guard leadership and soldiers and the US Army Reserve. The stock currently has a buy rating from many advisors. With almost 100% of its earnings, coming from governmental contracts the company’s growth will be directly affected, from any change in governmental spending on IT projects. Revenues from sub-contracting works contribute 10% of total revenue while 90% of the current year’s revenues accrue from prime contracts with the government.
We cannot say for sure if a positive trend line is expected here, However, two industry trends that will further support the positive move of the stock include;
- Greater business from the cost cut initiatives as US civilian agencies shift focus towards performance measurement in procurement and risk management in entitlement programs.
- Possibility of a decrease in government spending on defense and military intelligence programs as various foreign engagements of the army come to a cull. The government will be more inclined to increase spending on cyber-security, healthcare, and technology integration.
On the other hand the recent legislative and regulatory revisions in the limit of allowable executive compensation could pose a potential risk for the company’s overall earnings.