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What's in Store for Science Applications (SAIC) 4Q Earnings?

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Science Applications International Corporation SAIC is set to report fourth-quarter fiscal 2021 earnings on Mar 25.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed in the remaining one, the average surprise being 9.6%.

For the fiscal fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $1.73 billion, indicating a 12.4% improvement from the year-ago quarter’s reported figure. For earnings, the consensus mark stands at $1.43 per share, suggesting a decline of 9.5% from the prior-year quarter’s reported number.

Let’s see how things have shaped up for the upcoming announcement.

Factors at Play

Science Applications’ fourth-quarter fiscal 2021 results are likely to reflect a strong product portfolio, which has been aiding contract wins. The company’s capability to sustain its existing contracts along with the newly awarded ones across the customer portfolio is likely to have acted as a tailwind.

Notably, the company won more than $1.9 billion in national security contracts during the fourth quarter, which gives us an idea about its upcoming performance report.

Moreover, the acquisitions of Engility and Unisys Federal are expected to have been the key drivers of fiscal fourth-quarter earnings. The buyouts are also likely to have boosted the company’s margin profile and cash-flow generation.

Additionally, strong demand for the company’s IT modernization services, which include advanced analytics, software and app modernization, and cloud migration, may have been a key catalyst.

The company, last year, introduced the SAIC R3 portfolio of solutions to enable government agencies to meet the new work challenges posed by the coronavirus-led work-from-home environment. This is expected to have widened the company’s portfolio bandwidth and driven user acquisition.

However, the COVID-19 pandemic is likely to hurt Science Applications’ top and bottom lines in the fourth quarter. In its last earnings call, the company had stated that the pandemic will negatively impact its fiscal 2021 revenues and profits by $250 million and $35 million, respectively.

What Our Model Says

Our proven model predicts an earnings beat for Science Applications this time around. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the chances of an earnings beat. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Science Applications currently carries a Zacks Rank of 3 (Hold) and has an Earnings ESP of +5.35%.

Other Stocks With Favorable Combinations

Here are some other companies, which, per our model, have the right combination of elements to post earnings beats this quarter:

Winnebago Industries, Inc. WGO has an Earnings ESP of +7.69% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Evolus, Inc. (EOLS - Free Report) has an Earnings ESP of +35.39% and holds a Zacks Rank of 3, currently.

IHS Markit Ltd. INFO has an Earnings ESP of +1.02% and carries a Zacks Rank of 3 at present.

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