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Category: Stock Market and SAIC
Date: 9 September 2019 Stock Price: $83.03 We take a look at the 2nd quarter earnings release of their 2019 fiscal year of SAIC, the high-end engineering and IT solutions firm.
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About SAIC
SAIC® is a premier technology integrator solving our nation’s most complex modernization and readiness challenges. Our robust portfolio of offerings across the defense, space, civilian, and intelligence markets includes high-end solutions in engineering, IT, and mission solutions. Using our expertise and understanding of existing and emerging technologies, we integrate the best components from our own portfolio and our partner ecosystem to deliver innovative, effective, and efficient solutions.
We are 23,000 strong; driven by mission, united by purpose, and inspired by opportunities. Headquartered in Reston, Virginia, SAIC has pro forma annual revenues of approximately $6.5 billion.
We are 23,000 strong; driven by mission, united by purpose, and inspired by opportunities. Headquartered in Reston, Virginia, SAIC has pro forma annual revenues of approximately $6.5 billion.
Financial overview of SAIC's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: $1.594 billion (up from $1.115 billion for the same quarter of the previous year)
- Cost of sales: $1.409 billion (up from $1.003 billion for the same quarter of the previous year)
- Net income: $57 million (up from $49 million for the same quarter of the previous year)
- Diluted income per share: $0.96 (down from $1.13 for the same quarter of the previous year)
- Diluted number of shares outstanding: 59.1 million (up from 43.2 million for the same quarter of the previous year)
- Cash and cash equivalents: $179 million
- Cash and cash equivalents per share: $3.03
- Cash and cash equivalents makes up 3.87% of SAIC's total assets
- Cash and cash equivalents makes up 3.6% of SAIC's current market capital
- Trade receivables: $1.033 billion
- Trade receivables makes up 22.3% of SAIC's total assets
- Inventories: $130 million
- Inventories makes up 2.81% of SAIC's total assets
- Stockholders equity: $1.349 billion
- Stockholders equity per share: $16.92
- Cash generated from operations: $57 million
- Cash generated from operations per share: $0.96
SAIC's management commentary on the results and earnings guidance
RESTON, Va.--(BUSINESS WIRE)--Science Applications International Corporation (NYSE: SAIC), a leading technology integrator providing high-end solutions in engineering, IT, and mission solutions across the defense, space, civilian, and intelligence markets, today announced results for the second quarter ended August 2, 2019.
“SAIC had a solid quarter, keeping our attention on operational performance, completing another key acquisition integration milestone, and delivering strong business results," said SAIC CEO, Nazzic Keene. "We continue to build momentum and leverage our new breadth to offer deeper expertise to our customers, focus on our people, and drive profitable growth."
“SAIC had a solid quarter, keeping our attention on operational performance, completing another key acquisition integration milestone, and delivering strong business results," said SAIC CEO, Nazzic Keene. "We continue to build momentum and leverage our new breadth to offer deeper expertise to our customers, focus on our people, and drive profitable growth."
SAIC (NYSE: SAIC) stock price history
The image below shows the stock price performance of SAIC over the last 5 years. It's been a very profitabile 5 years for stockholders of SAIC with the stock increasing by almost 100% over the last 5 years. It was trading at just over $40 a stock 5 years ago and it is currently trading at $83.08 a stock. It did drop significantly on Friday 6 September 2019, with the stock price losing 8.14% on the day.
Recent coverage of SAIC
SAIC (SAIC) came out with quarterly earnings of $1.35 per share, beating the Zacks Consensus Estimate of $1.27 per share. This compares to earnings of $1.13 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 6.30%. A quarter ago, it was expected that this information technology company would pos t earnings of $1.21 per share when it actually produced earnings of $1.36, delivering a surprise of 12.40%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. SAIC, which belongs to the Zacks Computers - IT Services industry, posted revenues of $1.59 billion for the quarter ended July 2019, missing the Zacks Consensus Estimate by 2.79%. This compares to year-ago revenues of $1.12 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call . SAIC shares have added about 40.4% since the beginning of the year versus the S&P 500's gain of 17.2%.
What's Next for SAIC?
While SAIC has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for SAIC was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future.
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.49 on $1.69 billion in revenues for the coming quarter and $5.49 on $6.58 billion in revenues for the current fiscal year.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. SAIC, which belongs to the Zacks Computers - IT Services industry, posted revenues of $1.59 billion for the quarter ended July 2019, missing the Zacks Consensus Estimate by 2.79%. This compares to year-ago revenues of $1.12 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call . SAIC shares have added about 40.4% since the beginning of the year versus the S&P 500's gain of 17.2%.
What's Next for SAIC?
While SAIC has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for SAIC was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future.
It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.49 on $1.69 billion in revenues for the coming quarter and $5.49 on $6.58 billion in revenues for the current fiscal year.
SAIC (NYSE: SAIC) latest stock valuation
So based on SAIC's latest earnings report what do we value SAIC stock at? Our valuation model has a target (full value) price on SAIC of $83.20 a stock. We therefore believe the group is fully priced and do not offer a good entry point into the stock for fundamental long term or value investors. Rather look to enter the stock at least 10% below our target (full value) price of $83.20. So a good price to buy SAIC stock at would be closer to $75 a stock.