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1. Company Snapshot

1.a. Company Description

Science Applications International Corporation provides technical, engineering, and enterprise information technology (IT) services primarily in the United States.The company's offerings include engineering; technology integration; IT modernization; maintenance of ground and maritime systems; logistics; training and simulation; operation and program support services; and end-to-end services, such as design, development, integration, deployment, management and operations, sustainment, and security of its customers' IT infrastructure, as well as cloud migration, managed services, infrastructure modernization, and enterprise IT-as-a-service solutions.It serves the U.S. military comprising Army, Air Force, Navy, Marines, and Coast Guard; Department of Defense agencies; National Aeronautics and Space Administration; the U.S. Department of State; Department of Justice; Department of Homeland Security; and various intelligence community agencies, as well as U.S. federal civilian agencies.


The company was formerly known as SAIC Gemini, Inc.and changed its name to Science Applications International Corporation in September 2013.Science Applications International Corporation was founded in 1969 and is headquartered in Reston, Virginia.

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1.b. Last Insights on SAIC

Breaking News: Science Applications International Corporation reported Q3 earnings of $2.58 per share, surpassing the Zacks Consensus Estimate of $2.07 per share. This compares to earnings of $2.61 per share in the same quarter last year. Despite sales and profit declines, the company's book-to-bill ratio appears encouraging. Following the earnings release, several analysts have recommended holding the stock. For instance, one analyst from a reputable firm has maintained a hold rating on SAIC. Meanwhile, another analyst has also reiterated a hold recommendation.

1.c. Company Highlights

2. SAIC's Q2 FY2026 Earnings: A Mixed Bag

SAIC's second quarter fiscal year 2026 revenue declined 2.7% year-over-year, primarily due to a 3% headwind from Cloud One compute and store revenue, partially offset by new business volume. Despite the revenue dip, adjusted EBITDA margin improved to 10.5% due to strong program execution and a favorable legal settlement, reaching $185 million. Adjusted diluted earnings per share for the quarter were $3.63, significantly beating estimates of $2.25. Free cash flow improved significantly to $150 million.

Publication Date: Sep -05

📋 Highlights

Revenue Guidance and Outlook

The company revised its fiscal year 2026 revenue guidance to a range of $7.25 billion to $7.325 billion, reflecting a 2% to 3% organic contraction. This guidance anticipates organic revenue declines of 5.54% and 5.54% in the third and fourth quarters, respectively. For fiscal year 2027, SAIC expects flat to 3% growth, driven by a combination of on-contract growth, new business wins, and efficiency gains.

Margin Expansion and Cost Management

SAIC is focused on leveraging its enterprise operating model and adopting AI across core functions to drive margin improvement. The company has seen success in the civil business segment, achieving a mid to high 13% margin, up nearly 100 basis points year-over-year. The company is also actively managing its costs and increasing efficiency through several strategies, including accelerating the shift towards enterprise and mission IT, enhancing the go-to-market strategy, investing in AI and automation, and partnering with non-traditional defense contractors.

Valuation and Cash Flow

With a P/E Ratio of 12.29, P/B Ratio of 3.23, and EV/EBITDA of 7.92, SAIC's valuation multiples suggest a relatively reasonable pricing. The company's free cash flow yield is 9.26%, indicating a strong ability to generate cash. SAIC expects nearly $12 in free cash flow per share in fiscal year 2026 and between $13 to $14 in fiscal year 2027, both exceeding prior estimates. A normalized free cash flow run rate for FY '28 is estimated to be in the $5.30 to $5.40 range.

Tax Implications and Future Prospects

The significant EPS change between FY '26 and '27 is due to a low tax rate of 14% this year, compared to a projected 23% next year. SAIC expects to recover around $200 million in taxes paid over the past three years, with $60 million this year, $110 million next year, and potentially more in '28. The company's capital deployment plans continue to focus on driving long-term value for shareholders through share repurchases and capability-focused mergers and acquisitions.

3. NewsRoom

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Science Applications International Corporation (SAIC) Q3 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

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Why SAIC Stock Soared Today

Dec -04

Source: fool.com

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SAIC (SAIC) Q3 Earnings and Revenues Surpass Estimates

Dec -04

Source: zacks.com

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Boston Partners Sells 528,545 Shares of Science Applications International Co. $SAIC

Nov -27

Source: defenseworld.net

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Rep. Lisa C. McClain Sells Off Shares of Science Applications International Co. (NYSE:SAIC)

Nov -27

Source: defenseworld.net

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U.S. Navy Awards SAIC $242M Contract to Operate, Maintain and Upgrade Propulsion Test Facility

Nov -24

Source: globenewswire.com

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Building Homes for Heroes Honors SAIC at Annual Gala

Nov -21

Source: prnewswire.com

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SAIC Schedules Third Quarter Fiscal Year 2026 Earnings Conference Call for December 4 at 10 A.M. ET

Nov -20

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (0.88%)

6. Segments

Cost Reimbursement

Expected Growth: 0.8%

Cost Reimbursement from Science Applications International Corporation is driven by a 0.8 growth rate, primarily attributed to increasing government contracts, expanding presence in the defense and intelligence sectors, and a strong order backlog. Additionally, the company's diversified portfolio and strategic acquisitions contribute to its steady growth.

Time and Materials

Expected Growth: 0.9%

Time and Materials segment growth of 0.9% from Science Applications International Corporation is driven by increasing demand for IT services, steady government contracts, and a growing need for digital transformation in the public sector, offset by competitive pricing pressure and a shift towards fixed-price contracts.

Firm-fixed Price

Expected Growth: 1.1%

Science Applications International Corporation's 1.1% firm-fixed price growth is driven by increasing demand for digital transformation services, expansion into new markets, and strategic contract wins. Additionally, the company's focus on innovation, cost savings initiatives, and effective project execution contribute to its steady growth.

7. Detailed Products

Cloud and IT Services

Provides cloud-based solutions, IT consulting, and managed services to help customers modernize their IT infrastructure and improve efficiency.

Cybersecurity Solutions

Offers a range of cybersecurity services, including threat detection, incident response, and penetration testing to help customers protect against cyber threats.

Data Analytics and Artificial Intelligence

Provides data analytics and AI solutions to help customers gain insights from their data, improve decision-making, and drive business outcomes.

Digital Transformation Services

Helps customers transform their businesses through digital solutions, including digital strategy, design, and implementation.

Engineering and Integration Services

Provides engineering and integration services to help customers design, develop, and integrate complex systems and solutions.

Logistics and Supply Chain Management

Offers logistics and supply chain management services to help customers optimize their supply chains, improve efficiency, and reduce costs.

Training and Simulation

Provides training and simulation services to help customers improve performance, reduce costs, and enhance decision-making.

8. Science Applications International Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Science Applications International Corporation has a moderate threat of substitutes due to the presence of alternative solutions and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is low due to the specialized nature of Science Applications International Corporation's services, making it difficult for customers to switch to alternative providers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of multiple suppliers in the market, but Science Applications International Corporation's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the industry, including the need for specialized expertise and significant capital investments.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players in the market, leading to intense competition for market share and contracts.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 55.72%
Debt Cost 6.94%
Equity Weight 44.28%
Equity Cost 7.42%
WACC 7.15%
Leverage 125.83%

11. Quality Control: Science Applications International Corporation passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Leidos

A-Score: 5.7/10

Value: 4.3

Growth: 6.7

Quality: 5.9

Yield: 2.0

Momentum: 7.0

Volatility: 8.3

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Dolby Laboratories

A-Score: 5.3/10

Value: 3.4

Growth: 4.2

Quality: 8.5

Yield: 3.0

Momentum: 4.0

Volatility: 8.7

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Jack Henry

A-Score: 5.0/10

Value: 2.7

Growth: 5.7

Quality: 7.4

Yield: 3.0

Momentum: 1.5

Volatility: 10.0

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SAIC

A-Score: 4.8/10

Value: 6.8

Growth: 5.4

Quality: 6.4

Yield: 3.0

Momentum: 0.5

Volatility: 6.7

1-Year Total Return ->

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CACI

A-Score: 4.5/10

Value: 3.7

Growth: 6.4

Quality: 5.1

Yield: 0.0

Momentum: 4.5

Volatility: 7.0

1-Year Total Return ->

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ASGN

A-Score: 4.1/10

Value: 7.6

Growth: 6.2

Quality: 5.2

Yield: 0.0

Momentum: 0.0

Volatility: 5.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

101.79$

Current Price

101.79$

Potential

-0.00%

Expected Cash-Flows