Science Applications (SAIC) Secures U.S. Intelligence Contracts
Science Applications International Corporation SAIC has secured $284 million in contracts from the U.S. intelligence community in the first two months of 2024. The deals mark a milestone for SAIC's strategy to expand its mission, IT and engineering services within the intelligence sector.
David Ray, Science Applications' executive vice president of the Space and Intelligence Business Group, expressed confidence in leveraging these wins to strengthen customer relationships and broaden its service offerings.
Notably, the company received two contracts exceeding $100 million each, along with the first task order under a single-award indefinite delivery and quantity contract. These contracts cover various areas, such as data, AI and engineering, reflecting SAIC's commitment to providing comprehensive solutions to the intelligence community.
The company's recent integration of its intelligence and space divisions aims to foster greater collaboration and synergy, particularly in key markets like the National Reconnaissance Office and National Geospatial-Intelligence Agency.
Science Applications International Corporation Price and Consensus 
Science Applications International Corporation price-consensus-chart | Science Applications International Corporation Quote
Government Contracts Drive Revenue Growth
Science Applications maintains a strong focus on the federal government market, aiming to expand its market share. Over the past three years — 2021, 2022 and 2023 — SAIC derived 98% of its total revenues from contracts with the U.S. government. Its clientele includes various government entities, such as the Department of Homeland Security, NASA and the Department of State, as well as military branches like the Navy, Air Force and Army.
With major clients like the military and other government agencies, SAIC enjoys business stability and reduced revenue volatility. Government projects, once approved, typically span multiple years, ensuring a steady stream of revenues and enhancing revenue predictability.
Additionally, Science Applications stands to benefit from the increased federal government spending outlined in the latest budget proposal. This heightened budget allocation is anticipated to expedite contract awards, further bolstering SAIC's top-line growth.
Furthermore, the company is capitalizing on the surge in demand for its technology solutions, driven by the ongoing digital transformation in defense, space, intelligence and civilian sectors. SAIC's strategic business development, operational excellence and customer satisfaction had resulted in a robust contract backlog of $23.1 billion as of Nov 3, 2023.
In the third quarter of fiscal 2024, Science Applications reported a 10.6% increase in revenues, demonstrating the positive impact of existing and new contracts. Adjusted earnings per share increased 19%, reflecting strong operational performance, a lower tax rate and reduced outstanding share count.
Zacks Rank & Other Stocks to Consider
Currently, Science Applications carries a Zacks Rank #2 (Buy). Shares of SAIC have climbed 15.2% year to date (YTD).
Some other top-ranked stocks from the broader technology sector are NVIDIA Corporation NVDA, Meta Platforms META and Amazon.com AMZN. NVIDIA and Meta sport a Zacks Rank #1 (Strong Buy) each, while Amazon carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 earnings has been revised 15.3% upward to $23.22 per share in the past 30 days, which suggests year-over-year growth of 79.2%. The long-term estimated earnings growth rate for the stock is 29.7%. Shares of NVDA have surged 77.6% YTD.
The consensus mark for Meta’s 2024 earnings has been revised upward by 12 cents to $19.94 per share over the past 30 days, which indicates a 34.1% increase from 2023. It has a long-term earnings growth expectation of 19.5%. META stock has jumped 39% YTD.
The Zacks Consensus Estimate for Amazon’s 2024 earnings has moved north 2 cents to $4.08 per share in the past seven days, which implies an increase of 40.7% on a year-over-year basis. The company's long-term earnings growth rate is 28.1%. The AMZN stock has returned 17.7% to investors YTD.
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