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Science Applications & Partners to Build Combat Vehicle Model
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Science Applications International Corp. (SAIC - Free Report) recently announced that it has partnered with ST Kinetics and CMI Defence for the development of prototypes of combat vehicles.
The partnership will enable Science Applications to compete for an Engineering and Manufacturing Development (EMD) contract that requires a lightweight, mobile and lethal combat vehicle. The company plans to develop the requisite vehicle combining ST Kinetics’ Next Generation Armored Fighting Vehicle (NGAFV) and CMI Defence’s Cockerill Series 3105 turret, which is currently in production.
The vehicle will be in compliance with the specifications of the U.S. Army per the Mobile Protected Firepower (MPF) program. We believe that if Science Applications manages to win this contract, it will be another feather in its cap.
The stock has gained 1.5% year to date, underperforming the 39.7% rally of the industry it belongs to.
Recent Deal Wins
Science Applications’ frequent contract wins is expected to benefit top-line going forward.
In September, the company was awarded a $250 million blanket purchase agreement by the U.S. Department of Agriculture (USDA) for providing enterprise level security support and architecture services.
Prior to that, Science Applications received a $165 million information technology (IT) contract from the Commonwealth of Virginia to serve as a multisourcing service integrator (MSI). In the last quarter (second-quarter fiscal 2018), the company won a contract worth $621 million (if all options are exercised) from the General Services Administration (GSA) Federal Systems Integration and Management Center (FEDSIM). Moreover, the GSA, on behalf of the Army Software Engineering Directorate (SED), awarded another contract worth $404 million (if all options are exercised).
The company also won contracts from the National Aeronautics and Space Administration (NASA) GSFC Omnibus Multidisciplinary Engineering Services, U.S. Navy - Space and Naval Warfare Systems Command (SPAWAR), NASA Joint Operations, and National Institute of Mental Health.
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION Revenue (TTM)
However, we note that these low-margin deals are negatively impacting the company’s bottom line.
Adjusted EBITDA margin contracted 130 basis points (bps) on a year-over-year basis to 6.5% in the last reported quarter. Adjusted operating income margin contracted 120 bps to 5.5% in the same period.
These declines were primarily attributed to programs supporting federal civilian agencies, lower profitability on re-competed supply chain management contracts and higher severance and facility expense.
Zacks Rank and Key Picks
Science Applications currently has a Zacks Rank #5 (Strong Sell).
The long-term earnings growth rate for Applied Materials, Micron Technology and Guidewire Software is projected to be 17.1%, 10% and 14.6%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Science Applications & Partners to Build Combat Vehicle Model
Science Applications International Corp. (SAIC - Free Report) recently announced that it has partnered with ST Kinetics and CMI Defence for the development of prototypes of combat vehicles.
The partnership will enable Science Applications to compete for an Engineering and Manufacturing Development (EMD) contract that requires a lightweight, mobile and lethal combat vehicle. The company plans to develop the requisite vehicle combining ST Kinetics’ Next Generation Armored Fighting Vehicle (NGAFV) and CMI Defence’s Cockerill Series 3105 turret, which is currently in production.
The vehicle will be in compliance with the specifications of the U.S. Army per the Mobile Protected Firepower (MPF) program. We believe that if Science Applications manages to win this contract, it will be another feather in its cap.
The stock has gained 1.5% year to date, underperforming the 39.7% rally of the industry it belongs to.
Recent Deal Wins
Science Applications’ frequent contract wins is expected to benefit top-line going forward.
In September, the company was awarded a $250 million blanket purchase agreement by the U.S. Department of Agriculture (USDA) for providing enterprise level security support and architecture services.
Prior to that, Science Applications received a $165 million information technology (IT) contract from the Commonwealth of Virginia to serve as a multisourcing service integrator (MSI). In the last quarter (second-quarter fiscal 2018), the company won a contract worth $621 million (if all options are exercised) from the General Services Administration (GSA) Federal Systems Integration and Management Center (FEDSIM). Moreover, the GSA, on behalf of the Army Software Engineering Directorate (SED), awarded another contract worth $404 million (if all options are exercised).
The company also won contracts from the National Aeronautics and Space Administration (NASA) GSFC Omnibus Multidisciplinary Engineering Services, U.S. Navy - Space and Naval Warfare Systems Command (SPAWAR), NASA Joint Operations, and National Institute of Mental Health.
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION Revenue (TTM)
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION Revenue (TTM) | SCIENCE APPLICATIONS INTERNATIONAL CORPORATION Quote
Low-Margin Contracts Hurting Profitability
However, we note that these low-margin deals are negatively impacting the company’s bottom line.
Adjusted EBITDA margin contracted 130 basis points (bps) on a year-over-year basis to 6.5% in the last reported quarter. Adjusted operating income margin contracted 120 bps to 5.5% in the same period.
These declines were primarily attributed to programs supporting federal civilian agencies, lower profitability on re-competed supply chain management contracts and higher severance and facility expense.
Zacks Rank and Key Picks
Science Applications currently has a Zacks Rank #5 (Strong Sell).
Better-ranked stocks in the broader technology space include Applied Materials, Inc. (AMAT - Free Report) , Micron Technology, Inc. (MU - Free Report) and Guidewire Software, Inc. (GWRE - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The long-term earnings growth rate for Applied Materials, Micron Technology and Guidewire Software is projected to be 17.1%, 10% and 14.6%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>