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Science Applications International Corp. (SAIC)
NASDAQ:SAIC
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Science Applications
(NASDAQ:SAIC)66Neutral
Positive Factors
Business Model
SAIC's capital light business model likely a positive with the incoming administration given uncertain priorities, allowing it to adapt to different spending environments.
Earnings
SAIC trading higher pre-market on Q3 beat/raise.
Negative Factors
Investor Sentiment
The creation of the DOGE commission and the looming debt ceiling expiration have soured investor sentiment on government services stocks.
Science Applications (SAIC) vs. S&P 500 (SPY)
Market Cap
$4.83B
Dividend Yield1.54%
Average Volume (3M)710.45K
Price to Earnings (P/E)16.7
Beta (1Y)0.64
Revenue Growth-3.87%
EPS Growth-37.31%
CountryUS
Employees24,000
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)5.93
Shares Outstanding48,881,516
10 Day Avg. Volume767,903
30 Day Avg. Volume710,452
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.65
Price to Cash Flow (P/CF)8.40
P/FCF Ratio7.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$127.83Price Target Upside26.53% Upside
Rating ConsensusHold
Number of Analyst Covering9
Science Applications Business Overview & Revenue Model
Company DescriptionScience Applications International Corporation (SAIC) is a leading technology integrator providing full lifecycle services and solutions in the technical, engineering, and enterprise information technology sectors. The company offers a broad range of services, including systems engineering, software development, data analytics, and IT modernization to government and commercial customers. SAIC is known for its ability to integrate complex technologies and deliver mission-critical services that advance the capabilities of its clients.
How the Company Makes MoneySAIC primarily makes money through contracts and projects with government agencies, especially in the defense, intelligence, and civilian markets. The company's revenue streams include providing engineering and technical support, IT infrastructure services, cybersecurity solutions, and managed services. These contracts are often long-term and are secured through competitive bidding processes. Additionally, SAIC partners with various technology providers and leverages these relationships to enhance its service offerings and drive additional revenue through collaboration on large-scale projects. The company's earnings are significantly influenced by government budgets and spending priorities, particularly in defense and technology modernization initiatives.
Science Applications Financial Statement Overview
Summary
Science Applications displays commendable financial stability with strong profitability metrics, consistent margins, and effective equity utilization. Despite the slight dip in revenue, the company maintains efficient cost management and robust cash flow capabilities, positioning it well within the software industry.Income Statement
The company demonstrates stable profitability with a gross profit margin of 11.55% and a net profit margin of 4.11% TTM. Although revenue has slightly decreased from the previous year, the EBIT margin remains strong at 6.83%. This indicates effective cost management amid revenue fluctuations.75
Positive
Balance Sheet
The debt-to-equity ratio stands at 0.25 TTM, reflecting a manageable leverage level. However, stockholders' equity has decreased, impacting the equity ratio, which is currently 30.56%. The company maintains a solid return on equity of 18.79%, showcasing efficient use of equity to generate profits.70
Positive
Cash Flow
Free cash flow has exhibited a strong growth rate of 16.81% TTM, indicating robust cash generating capability. The operating cash flow to net income ratio is 1.46, which signifies good cash conversion from earnings. However, the free cash flow to net income ratio is slightly lower at 1.42, suggesting potential reinvestment needs.65
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 7.25B | 7.44B | 7.70B | 7.39B | 7.06B | 6.38B | Gross Profit |
| 858.00M | 872.00M | 888.00M | 859.00M | 792.00M | 706.00M | EBIT |
| 475.00M | 741.00M | 501.00M | 462.00M | 390.00M | 370.00M | EBITDA |
| 429.00M | 882.00M | 665.00M | 684.00M | 626.00M | 507.00M | Net Income Common Stockholders |
| 285.00M | 477.00M | 300.00M | 277.00M | 209.00M | 226.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 94.00M | 94.00M | 109.00M | 106.00M | 171.00M | 188.00M | Total Assets |
| 5.31B | 5.31B | 5.54B | 5.75B | 5.72B | 4.71B | Total Debt |
| 2.25B | 2.25B | 2.53B | 2.71B | 2.72B | 2.09B | Net Debt |
| 2.15B | 2.15B | 2.42B | 2.60B | 2.55B | 1.91B | Total Liabilities |
| 3.53B | 3.53B | 3.84B | 4.12B | 4.17B | 3.28B | Stockholders Equity |
| 1.78B | 1.78B | 1.69B | 1.62B | 1.54B | 1.42B |
| Cash Flow | Free Cash Flow | ||||
| 525.00M | 369.00M | 507.00M | 482.00M | 709.00M | 437.00M | Operating Cash Flow |
| 565.00M | 396.00M | 532.00M | 518.00M | 755.00M | 458.00M | Investing Cash Flow |
| -264.00M | 314.00M | -36.00M | -292.00M | -1.23B | -47.00M | Financing Cash Flow |
| -374.00M | -725.00M | -493.00M | -301.00M | 464.00M | -455.00M |
Science Applications Technical Analysis
Negative
101.03
Price Trends
108.32
Negative
121.18
Negative
123.37
Negative
Market Momentum
-3.05
Negative
43.89
Neutral
38.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAIC, the sentiment is Negative. The current price of 101.03 is below the 20-day moving average (MA) of 102.30, below the 50-day MA of 108.32, and below the 200-day MA of 123.37, indicating a bearish trend. The MACD of -3.05 indicates Negative momentum. The RSI at 43.89 is Neutral, neither overbought nor oversold. The STOCH value of 38.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SAIC.
Science Applications Risk Analysis
Science Applications disclosed 30 risk factors in its most recent earnings report. Science Applications reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Science Applications Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $67.14B | 16.37 | 27.30% | 1.70% | 4.44% | 110.33% | |
77 Outperform | $7.51B | 15.45 | 12.88% | ― | 14.04% | 29.08% | |
73 Outperform | $6.40B | 17.31 | 25.81% | 1.24% | 11.30% | ― | |
69 Neutral | $17.34B | 14.34 | 28.42% | 1.19% | 7.93% | 541.97% | |
66 Neutral | $4.83B | 16.66 | 18.80% | 1.54% | -3.87% | -37.31% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% |
* Technology Sector Average
Performance Comparison
SAIC
Science Applications
101.03
-40.43
-28.58%
CACI
Caci International
353.02
-23.99
-6.36%
KBR
KBR
49.34
-11.78
-19.27%
NOC
Northrop Grumman
463.83
13.32
2.96%
LDOS
Leidos Holdings
132.22
4.30
3.36%
Science Applications Earnings Call Summary
Earnings Call Date: Dec 5, 2024 | % Change Since: -18.20% | Next Earnings Date: Mar 27, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted positive aspects such as revenue growth, increased guidance, and a robust share repurchase program. However, challenges remain with lower free cash flow, decreased book-to-bill ratio, and recompete win rates below targets. SAIC is actively addressing these issues with strategic bids and cost management.Highlights
Organic Revenue Growth
SAIC reported third quarter organic revenue growth of 4.3% despite a 5-point headwind from contract transitions.
Increase in Revenue Guidance
SAIC increased its revenue guidance for the year to a range of $7.425 billion to $7.475 billion, representing organic growth of approximately 3%.
Adjusted Earnings Increase
Adjusted diluted earnings per share increased by $0.40, largely due to a lower effective tax rate and modestly lower share count.
Share Repurchase Program
SAIC announced a new $1.2 billion share repurchase authorization and expects to repurchase approximately $500 million of shares this year.
Increase in Submitted Bids
SAIC submitted $22 billion in bids through the third quarter and expects to submit more than $25 billion for the full year, surpassing their prior target.
Lowlights
Reduced Free Cash Flow
Free cash flow of $9 million was lower than typical for the third quarter due to an additional payroll cycle and strong collections in the second quarter.
Book-to-Bill Ratio Decrease
Bookings of $1.5 billion resulted in the trailing 12-month book-to-bill ratio moderating to 0.9, though the target is to reach 1.2 by the first half of fiscal year 2026.
Recompete Win Rate Below Target
Recompete win rates have been below the target of 90%, impacting overall growth.
Potential Revenue Headwinds
Recompete headwinds expected to be a little over 2% next year, with additional potential impact from walking away from certain contracts.
Company Guidance
In the SAIC third quarter fiscal year 2025 earnings call, the company reported a 4.3% organic revenue growth, overcoming a 5-point headwind from contract transitions. Adjusted EBITDA reached $197 million with a 10% margin, and adjusted diluted earnings per share stood at $2.61, benefiting from a 16% effective tax rate. Free cash flow was $9 million, impacted by an additional payroll cycle and strong collections in the previous quarter. SAIC increased its full-year revenue growth expectation to 3%, slightly above the prior guidance midpoint. The company submitted $22 billion in bids through the third quarter, raising its full-year submit expectations to over $25 billion, with a pipeline projected to exceed $30 billion by fiscal year 2027. The backlog of submitted bids grew to nearly $19 billion, while bookings for the quarter were $1.5 billion, leading to a trailing 12-month book-to-bill ratio of 0.9, with a target of 1.2 by the first half of fiscal year 2026.Science Applications Corporate Events
Executive/Board Changes
Science Applications Expands Board with New Appointment
Positive
Nov 18, 2024
Science Applications International Corporation appointed John K. Tien, Jr. to its Board of Directors, expanding the board to twelve members. Tien, with a rich background in government and finance, including roles at Citigroup and the U.S. Department of Homeland Security, will join the Nominating and Corporate Governance Committee. His appointment reflects his diverse leadership experience and promises to bring strategic insights to the company’s governance.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.