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SAIC (SAIC) Up 2.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for SAIC (SAIC - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SAIC due for a pullback? 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 Beats on Q3 Earnings & Revenues
Science Applications reported strong third-quarter fiscal 2022 results, wherein both earnings and revenues topped the Zacks Consensus Estimate. The company reported adjusted earnings of $1.85 per share, surpassing the Zacks Consensus Estimate of $1.45. The bottom line improved 14% year over year.
Revenues increased 4% from the year-ago quarter’s level to $1.90 billion, outpacing the consensus mark of $1.87 billion. The top line was mainly driven by contributions from the newly acquired Halfaker business and the ramp-up of new and existing contracts. Adjusting for the impact of acquired revenues, the metric moved up 2.1%.
Quarter in Detail
Net bookings for the fiscal third quarter were $1.4 billion, reflecting a book-to-bill ratio of 0.7. Science Applications’ estimated backlog of signed business deals was $24 billion, of which $3.4 billion was funded.
Non-GAAP operating income surged 10% year over year to $126 million, primarily driven by solid contract portfolios, and lower integration and indirect costs. Non-GAAP operating margin expanded 30 basis points (bps) to 6.6%.
Adjusted EBITDA increased 4% year over year to $171 million. Adjusted EBITDA margin remained flat year over year at 9%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $148 million, up from the prior quarter’s $133 million. As of Oct 29, 2021, its long-term debt (net of current portion) was $2.43 billion.
The company generated operating cash flows of $134 million in the second quarter and $415 million in the first nine months of fiscal 2022. Free cash flow was $124 million in the second quarter and $373 million in the first three quarters of fiscal 2022.
Both free cash flow and cash through operating activities reflected a negative impact from the payroll tax payments associated with the Coronavirus Aid, Relief, and Economic Security Act.
In the fiscal third quarter, Science Applications deployed $97 million of capital, which included $21 million for dividend payments, $63 million for planned share repurchases, $3 million for acquisitions and $10 million for capital expenditure. SAIC made $23 million of mandatory debt repayment during the quarter.
Science Applications announced that its board of directors authorized a quarterly cash dividend of 37 cents per share to be payable on Jan 28, 2022, to shareholders of record as of Jan 14, 2022.
Guidance
Science Applications updated its fiscal 2022 guidance. It now anticipates revenues between $7.35 billion and $7.40 billion compared with the previously guided range of $7.30-$7.40 billion. The top line indicates a negative impact of $125 million on the supply chain portfolio, stemming from the pandemic.
The company expects adjusted earnings in the range of $6.75-$6.95 per share, up from the previous range of $6.50-$6.70 per share. The projected adjusted EBITDA margin is anticipated at 9-9.1%, up from the previously estimated 8.9-9%.
Free cash flow is now expected between $450 million and $470 million for fiscal 2022 instead of the earlier forecast $430-$470 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -11.54% due to these changes.
VGM Scores
At this time, SAIC has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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) Up 2.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for SAIC (SAIC - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is SAIC due for a pullback? 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 Beats on Q3 Earnings & Revenues
Science Applications reported strong third-quarter fiscal 2022 results, wherein both earnings and revenues topped the Zacks Consensus Estimate. The company reported adjusted earnings of $1.85 per share, surpassing the Zacks Consensus Estimate of $1.45. The bottom line improved 14% year over year.
Revenues increased 4% from the year-ago quarter’s level to $1.90 billion, outpacing the consensus mark of $1.87 billion. The top line was mainly driven by contributions from the newly acquired Halfaker business and the ramp-up of new and existing contracts. Adjusting for the impact of acquired revenues, the metric moved up 2.1%.
Quarter in Detail
Net bookings for the fiscal third quarter were $1.4 billion, reflecting a book-to-bill ratio of 0.7. Science Applications’ estimated backlog of signed business deals was $24 billion, of which $3.4 billion was funded.
Non-GAAP operating income surged 10% year over year to $126 million, primarily driven by solid contract portfolios, and lower integration and indirect costs. Non-GAAP operating margin expanded 30 basis points (bps) to 6.6%.
Adjusted EBITDA increased 4% year over year to $171 million. Adjusted EBITDA margin remained flat year over year at 9%.
Balance Sheet & Cash Flow Details
Science Applications ended the fiscal third quarter with cash and cash equivalents of $148 million, up from the prior quarter’s $133 million. As of Oct 29, 2021, its long-term debt (net of current portion) was $2.43 billion.
The company generated operating cash flows of $134 million in the second quarter and $415 million in the first nine months of fiscal 2022. Free cash flow was $124 million in the second quarter and $373 million in the first three quarters of fiscal 2022.
Both free cash flow and cash through operating activities reflected a negative impact from the payroll tax payments associated with the Coronavirus Aid, Relief, and Economic Security Act.
In the fiscal third quarter, Science Applications deployed $97 million of capital, which included $21 million for dividend payments, $63 million for planned share repurchases, $3 million for acquisitions and $10 million for capital expenditure. SAIC made $23 million of mandatory debt repayment during the quarter.
Science Applications announced that its board of directors authorized a quarterly cash dividend of 37 cents per share to be payable on Jan 28, 2022, to shareholders of record as of Jan 14, 2022.
Guidance
Science Applications updated its fiscal 2022 guidance. It now anticipates revenues between $7.35 billion and $7.40 billion compared with the previously guided range of $7.30-$7.40 billion. The top line indicates a negative impact of $125 million on the supply chain portfolio, stemming from the pandemic.
The company expects adjusted earnings in the range of $6.75-$6.95 per share, up from the previous range of $6.50-$6.70 per share. The projected adjusted EBITDA margin is anticipated at 9-9.1%, up from the previously estimated 8.9-9%.
Free cash flow is now expected between $450 million and $470 million for fiscal 2022 instead of the earlier forecast $430-$470 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -11.54% due to these changes.
VGM Scores
At this time, SAIC has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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.