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Science Applications International Corporation

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Science Applications is benefiting from higher orders in supply chain and continued contract wins. Moreover, management is optimistic about its long-term strategy called Ingenuity 2025, which it expects to accelerate with the acquisition of Engility. It expects to deliver increased customer access, higher investments in competitive and niche solutions and improved cash flow in the coming year. The company has a large pipeline of new projects and continues to win more deals regularly. Estimates have been stable lately ahead of the company’s Q4 earnings release. It has positive record of earnings surprises in recent quarters. However, the company continues to witness increase in cost reimbursement type contracts compared with fixed price contract, which is expected to be a drag on margins. Though Science Applications has been steadily winning contracts from the federal government, these low-margin deals have been impacting its profitability.

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