Science Applications (SAIC - Free Report) reported third-quarter fiscal 2020 earnings of $1.39 per share, missing the Zacks Consensus Estimate by 3.47%. However, the bottom line improved 2.96% year over year.
Moreover, revenues jumped 38% from the year-ago quarter to $1.6 billion but lagged the Zacks Consensus Estimate of $1.63 billion. Revenues realized from the acquisition of Engility drove the top line. Strong performance of the company’s contract portfolio is a tailwind.
However, adjusting for the impact of acquired revenues, the metric declined 1.5% due to acquisition related dis-synergies
Quarter in Detail
Net bookings for the quarter were approximately $2.2 billion, reflecting a book-to-bill ratio of approximately 1.4%.
Science Applications’ estimated backlog of signed business deals was approximately $14.5 billion of which, $2.9 billion was funded.
Adjusted operating margin contracted 40 basis points (bps) year over year to 5.8% in the reported quarter.
Adjusted EBITDA of $135 million increased 38%. Adjusted EBITDA margin was flat at 8.3%.
Balance Sheet & Cash Flow
Science Applications ended the quarter with cash and cash equivalents of $162 million, down from $179 million reported in the previous quarter.
Operating cash flow was $116 million, up from $95 million in the sequential quarter. Free cash flow was $116 million compared with $90 million in the preceding quarter.
During the quarter, Science Applications deployed $24 million of capital, $21 million to cash dividends and $3 million to debt repayment.
Guidance
For fiscal 2020, the company expects second-half revenues to be consistent with the first-half figure of $3.6 billion.
For the full fiscal, adjusted EBITDA margin is likely to be at the mid-to-upper-end of the 8.2-8.4% range.
Free cash flow is expected to be at least $425 million for fiscal 2020.
Zacks Rank & Stocks to Consider
SAIC currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Keysight Technologies Inc. (KEYS - Free Report) , Fortinet, Inc. (FTNT - Free Report) and CommVault Systems, Inc. (CVLT - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Keysight, Fortinet and CommVault Systems is currently estimated at 9.1%, 14% and 10%, respectively.
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Science Applications (SAIC - Free Report) reported third-quarter fiscal 2020 earnings of $1.39 per share, missing the Zacks Consensus Estimate by 3.47%. However, the bottom line improved 2.96% year over year.
Moreover, revenues jumped 38% from the year-ago quarter to $1.6 billion but lagged the Zacks Consensus Estimate of $1.63 billion. Revenues realized from the acquisition of Engility drove the top line. Strong performance of the company’s contract portfolio is a tailwind.
However, adjusting for the impact of acquired revenues, the metric declined 1.5% due to acquisition related dis-synergies
Quarter in Detail
Net bookings for the quarter were approximately $2.2 billion, reflecting a book-to-bill ratio of approximately 1.4%.
Science Applications’ estimated backlog of signed business deals was approximately $14.5 billion of which, $2.9 billion was funded.
Adjusted operating margin contracted 40 basis points (bps) year over year to 5.8% in the reported quarter.
Adjusted EBITDA of $135 million increased 38%. Adjusted EBITDA margin was flat at 8.3%.
Balance Sheet & Cash Flow
Science Applications ended the quarter with cash and cash equivalents of $162 million, down from $179 million reported in the previous quarter.
Operating cash flow was $116 million, up from $95 million in the sequential quarter. Free cash flow was $116 million compared with $90 million in the preceding quarter.
During the quarter, Science Applications deployed $24 million of capital, $21 million to cash dividends and $3 million to debt repayment.
Guidance
For fiscal 2020, the company expects second-half revenues to be consistent with the first-half figure of $3.6 billion.
For the full fiscal, adjusted EBITDA margin is likely to be at the mid-to-upper-end of the 8.2-8.4% range.
Free cash flow is expected to be at least $425 million for fiscal 2020.
Zacks Rank & Stocks to Consider
SAIC currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader technology sector are Keysight Technologies Inc. (KEYS - Free Report) , Fortinet, Inc. (FTNT - Free Report) and CommVault Systems, Inc. (CVLT - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Keysight, Fortinet and CommVault Systems is currently estimated at 9.1%, 14% and 10%, respectively.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.6% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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