A month has gone by since the last earnings report for SAIC (SAIC Quick QuoteSAIC - Free Report) . Shares have lost about 7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Science Applications Q4 Earnings & Sales Beat Estimates

Science Applications delivered better-than-expected fourth-quarter fiscal 2023 results. The company reported adjusted earnings of $2.04 per share, surpassing the Zacks Consensus Estimate of $1.63. The bottom line increased 36% from the year-ago quarter’s earnings of $1.50 per share, mainly driven by higher revenues, a lower tax rate and an approximately 4% reduction in shares outstanding.

Revenues soared 10% year over year to $1.97 billion and outpaced the consensus mark of $1.86 billion. The increase was primarily due to the benefits of additional five working days during the quarter and the ramp-up of new and existing contracts, partially offset by contract completions.

Quarter in Detail

Net bookings for the fiscal fourth quarter were $1.3 billion, reflecting a book-to-bill ratio of 0.7. Net bookings for the full-fiscal 2023 were $7.4 billion, reflecting a book-to-bill ratio of 1. SAIC’s estimated backlog of signed business deals was $23.8 billion at the end of fiscal 2023, of which $3.6 billion was funded.

The non-GAAP operating income increased 23.6% year over year to $131 million. The non-GAAP operating margin expanded 80 basis points to 6.7%.

Adjusted EBITDA increased to $171 million from $146 million in the year-ago quarter. The adjusted EBITDA margin expanded to 8.7% from 8.2% in the year-ago quarter.

Balance Sheet & Cash Flow Details

Science Applications ended the fiscal fourth quarter with cash and cash equivalents of $109 million, up from the prior quarter’s $53 million. As of Feb 3, 2023, its long-term debt (net of the current portion) was $2.34 billion.

The company generated operating and free cash flows of $145 million and $148 million, respectively, in the fourth quarter. In the full-fiscal 2023, the company generated operating and free cash flows of $532 million and $457 million, respectively.

In the fiscal fourth quarter, Science Applications paid out $20 million in dividends and repurchased shares worth $56 million. During the full-fiscal 2023, the company paid out dividends of $83 million and bought back shares worth $245 million.

Science Applications announced that its board of directors authorized a quarterly cash dividend of 37 cents per share, payable on Apr 28, 2023, to shareholders of record as of Apr 14, 2023.

Fiscal 2024 Guidance

The company anticipates revenues in the band of $7.05-$7.20 billion in fiscal 2024. The company expects adjusted earnings in the band of $6.80-$7.00 per share.

Management expects to generate free cash flow between 460 million and $480 million in fiscal 2024. It projects the adjusted EBITDA margin between 9.2% and 9.4% in fiscal 2024.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -12.18% due to these changes.

VGM Scores

Currently, SAIC has a strong Growth Score of A, though it is lagging a lot 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 second quintile 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. It's no surprise SAIC has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.