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SAIC (SAIC) Down 2.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for SAIC (SAIC - Free Report) . Shares have lost about 2.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is SAIC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Science Applications Misses Q4 Earnings Estimates
Science Applications reported fourth-quarter adjusted earnings of $1.43 per share, which lagged the Zacks Consensus Estimate by a penny. The figure also decreased 30% year over year due to lower revenues and higher expenses.
Revenues declined 12% year over year to $1.74 billion but outpaced the consensus mark by 5.9%. The year-over-year decrease was due to the sale of the logistics and supply chain management division, the Forfeiture Support Associates (“FSA”) joint venture's deconsolidation, contract completions and an additional five working days in the year-ago quarter. The downside was partially offset by a ramp-up in existing and new contracts.
Nevertheless, the top line increased by 7.7% when adjusted for the impact of the logistics and supply chain management division’s divesture, the deconsolidation of the FSA joint venture and the estimated impact of an additional five working days in the year-ago quarter.
Adjusted EBITDA was $127 million, down 26% year over year. The adjusted EBITDA margin contracted 140 basis points (bps) on a year-over-year basis to 7.3%. The year-over-year decline was due to the sale of the logistics and supply chain management division, the FSA joint venture's deconsolidation and higher incentive-based compensation expenses.
Quarter in Detail
Net bookings for the fiscal fourth quarter were $1.4 billion, reflecting a book-to-bill ratio of 0.8. SAIC’s estimated backlog of signed business deals was $22.8 billion at the end of the fiscal fourth quarter, of which $3.5 billion was funded.
Selling, general and administrative (SG&A) expenses increased 12% to $114 million. SG&A expenses, as a percentage of revenues, rose to 6.6% from 5.8% in the year-ago quarter.
Non-GAAP operating income plunged 32% year over year to $89 million, mainly due to lower revenues and higher expenses. The non-GAAP operating margin contracted 160 bps year over year to 5.1%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $94 million, down from the prior quarter’s $311 million.
As of Feb 2, 2024, Science Applications’ long-term debt (net of the current portion) was $2.02 billion compared with $2.2 billion as of Nov 3, 2023.
The company generated operating and free cash flows of $63 million and $97 million, respectively, in the fiscal fourth quarter. The company generated operating and free cash flows of $396 million and $414 million, respectively, in fiscal 2024.
Fiscal 2025 Guidance
Science Applications updated its fiscal 2025 guidance. The company raised the fiscal 2025 revenue guidance range to $7.35-$7.50 billion from $7.25-$7.40 billion projected earlier. It projects adjusted EBITDA in the $680-$700 million range for the fiscal. However, SAIC revised downward the adjusted EBITDA margin to 9.2%-9.4% from 9.4%-9.6% forecasted previously.
SAIC still expects adjusted earnings in the $8-$8.20 per share range. It projects to generate free cash flow in the band of $490-$510 million, up from the earlier guidance range of $480-$500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, SAIC has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SAIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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SAIC (SAIC) Down 2.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for SAIC (SAIC - Free Report) . Shares have lost about 2.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is SAIC due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Science Applications Misses Q4 Earnings Estimates
Science Applications reported fourth-quarter adjusted earnings of $1.43 per share, which lagged the Zacks Consensus Estimate by a penny. The figure also decreased 30% year over year due to lower revenues and higher expenses.
Revenues declined 12% year over year to $1.74 billion but outpaced the consensus mark by 5.9%. The year-over-year decrease was due to the sale of the logistics and supply chain management division, the Forfeiture Support Associates (“FSA”) joint venture's deconsolidation, contract completions and an additional five working days in the year-ago quarter. The downside was partially offset by a ramp-up in existing and new contracts.
Nevertheless, the top line increased by 7.7% when adjusted for the impact of the logistics and supply chain management division’s divesture, the deconsolidation of the FSA joint venture and the estimated impact of an additional five working days in the year-ago quarter.
Adjusted EBITDA was $127 million, down 26% year over year. The adjusted EBITDA margin contracted 140 basis points (bps) on a year-over-year basis to 7.3%. The year-over-year decline was due to the sale of the logistics and supply chain management division, the FSA joint venture's deconsolidation and higher incentive-based compensation expenses.
Quarter in Detail
Net bookings for the fiscal fourth quarter were $1.4 billion, reflecting a book-to-bill ratio of 0.8. SAIC’s estimated backlog of signed business deals was $22.8 billion at the end of the fiscal fourth quarter, of which $3.5 billion was funded.
Selling, general and administrative (SG&A) expenses increased 12% to $114 million. SG&A expenses, as a percentage of revenues, rose to 6.6% from 5.8% in the year-ago quarter.
Non-GAAP operating income plunged 32% year over year to $89 million, mainly due to lower revenues and higher expenses. The non-GAAP operating margin contracted 160 bps year over year to 5.1%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $94 million, down from the prior quarter’s $311 million.
As of Feb 2, 2024, Science Applications’ long-term debt (net of the current portion) was $2.02 billion compared with $2.2 billion as of Nov 3, 2023.
The company generated operating and free cash flows of $63 million and $97 million, respectively, in the fiscal fourth quarter. The company generated operating and free cash flows of $396 million and $414 million, respectively, in fiscal 2024.
Fiscal 2025 Guidance
Science Applications updated its fiscal 2025 guidance. The company raised the fiscal 2025 revenue guidance range to $7.35-$7.50 billion from $7.25-$7.40 billion projected earlier. It projects adjusted EBITDA in the $680-$700 million range for the fiscal. However, SAIC revised downward the adjusted EBITDA margin to 9.2%-9.4% from 9.4%-9.6% forecasted previously.
SAIC still expects adjusted earnings in the $8-$8.20 per share range. It projects to generate free cash flow in the band of $490-$510 million, up from the earlier guidance range of $480-$500 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, SAIC has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, SAIC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.