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What's in Store for Science Applications' (SAIC) Q4 Earnings?

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Science Applications International Corporation (SAIC - Free Report) is set to report fourth-quarter fiscal 2020 results on Mar 26.

The company’s earnings surpassed the Zacks Consensus Estimate in three of the last four quarters and missed in the other, the average positive surprise being 11.7%.

In the last reported quarter, the company delivered earnings of $1.39 per share, missing the Zacks Consensus Estimate of $1.44. However, the bottom-line figure improved nearly 3% 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.


The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $1.57 billion, indicating approximately 32% improvement from the year-ago reported figure. For earnings, the consensus estimate stands at $1.32, suggesting 12.8% year-over-year growth.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Science Applications’ fiscal fourth-quarter performance is likely to have benefited from its strong product portfolio, which is aiding contract wins. The company’s capability to sustain its existing contracts, coupled with the newly-awarded ones across the customer portfolio, is likely to have been a steady tailwind.

Moreover, the integration of the Engility buyout might have driven the company’s top and bottom lines. In the last reported quarter, excluding Engility, revenues dipped 1.5%, year on year.

The acquisition of Engility is also likely to have boosted the company’s margin profile and cash flow.

Nonetheless, revenue dis-synergies due to the elimination of prime sub-duplicate revenues might have had a slight negative impact. Further, higher interest expenses are likely to have dampened the bottom line.

Furthermore, investors should be more focused on the company’s guidance rather than the quarterly results. Science Applications’ guidance for fiscal 2021 will give a proper insight about the company’s plans to combat the coronavirus crisis and stay afloat.

What Our Model Says

Our proven model does not predict an earnings beat for Science Applications this season. 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. But that’s not the case here. 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 2 and has an Earnings ESP of -0.51%.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their soon to be reported quarterly results:

FactSet Research Systems Inc. (FDS - Free Report) has an Earnings ESP of +0.77% and carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ascendis Pharma A/S (ASND - Free Report) has an Earnings ESP of +3.15% and carries a Zacks Rank of 3, at present.

Lululemon Athletica Inc. (LULU - Free Report) has an Earnings ESP of +0.42% and currently carries a Zacks Rank of 3.

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