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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 Q3 Earnings: A Mixed Bag with Promising Outlook

Science Applications International Corporation (SAIC) reported Q3 revenue of $1.87 billion, down 5.6% year-over-year, largely due to a one-point headwind from the government shutdown. Despite this, the company demonstrated strong program execution, with adjusted EBITDA of $185 million, or 9.9%. Adjusted diluted EPS was $2.58, beating estimates of $2.07. The company generated $135 million in free cash flow, a notable achievement considering the government shutdown's impact on collections.

Publication Date: 08:35

📋 Highlights
  • Q3 Revenue Decline:: Revenue fell 5.6% YoY to $1.87B, impacted by a government shutdown headwind.
  • Adjusted EBITDA Growth:: Increased to $185M (9.9% margin) despite revenue dip, driven by strong program execution.
  • Free Cash Flow Resilience:: Generated $135M in free cash flow despite government shutdown disruptions.
  • SilverEdge Acquisition Impact:: Expected to be accretive in 2027, boosting margins and EPS by $0.15–$0.20.
  • Share Buyback Plan:: Committed $1B in share repurchases over 2026–2027 to enhance shareholder value.

Segment Performance

The civil business segment declined 7% year-over-year; however, the nine-month trend shows a flat performance with improved margins. SAIC attributes the decline to seasonality and lumpiness rather than a single program-related issue. The company expects the civil business to improve, driven by growth in agencies such as CBP, DHS, and FAA.

Growth Strategy and Outlook

SAIC's management team outlined priorities to drive growth, including sharpening focus on execution, efficiently deploying financial resources, and prioritizing yield and bid quality. The company has identified over $100 million in annual spend to reinvest into higher ROI areas and increase margins. For fiscal year 2026, SAIC increased its total revenue guidance and reaffirmed organic revenue growth guidance.

Acquisition and Synergies

The acquisition of SilverEdge, a provider of AI capabilities to the intelligence community, is expected to be accretive in the next year, with increased margins and EPS. SAIC's interim CEO, Jim Reagan, highlighted the opportunities presented by this acquisition, particularly in AI solutions.

Valuation and Returns

With a P/E Ratio of 12.66 and an EV/EBITDA of 7.17, SAIC's valuation appears reasonable. The company's ROE is 24.28%, indicating strong profitability. SAIC's leverage target remains around 3.0, and the company plans to repurchase approximately $500 million in shares in each of fiscal years 2026 and 2027, totaling $1 billion.

Future Prospects

SAIC expects to return to revenue growth in the coming quarters, driven by efficiency efforts and improved execution. The company is well-positioned to help implement the DOD's announced reforms aimed at increasing procurement speed. Analysts estimate next year's revenue growth at -2.2%, but SAIC's focus on delivering good performance and on-contract growth through blocking and tackling exercises is expected to drive future growth.

3. NewsRoom

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Science Applications International: Growing Margins And Robust Return On Equity Signal Strength

Dec -06

Source: seekingalpha.com

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SAIC Q3 Earnings Beat: Will Strong FY26 Guidance Lift the Stock?

Dec -05

Source: zacks.com

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Science Applications International Co. $SAIC Shares Sold by Capital Fund Management S.A.

Dec -05

Source: defenseworld.net

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Science Applications International Co. (NYSE:SAIC) Given Average Recommendation of “Hold” by Analysts

Dec -05

Source: defenseworld.net

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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

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

1-Year Total Return ->

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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

1-Year Total Return ->

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Stock-Card
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

1-Year Total Return ->

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Stock-Card
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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Stock-Card
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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Stock-Card
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

100.61$

Current Price

100.61$

Potential

-0.00%

Expected Cash-Flows