What's in Store for Science Applications (SAIC) Q2 Earnings?

Science Applications International Corporation SAIC is set to report second-quarter fiscal 2020 earnings on Sep 5.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 19.4%.

In the last reported quarter, the company delivered earnings of $1.36 per share, beating the Zacks Consensus Estimate of $1.21 and also improving 11% year over year.

Moreover, revenues surged 37% from the year-ago quarter to $1.62 billion and further outpaced the Zacks Consensus Estimate of $1.61 billion, driven by the acquisition of Engility.

For the fiscal second quarter, the Zacks Consensus Estimate for revenues is pegged at $1.64 billion, indicating a 47.1% improvement from the year-ago reported figure. For earnings, the consensus estimate stands at $1.27, suggesting a rise of 12.4% from the prior-year reported number.

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

Factors to Consider

Science Applications’ second-quarter fiscal 2020 results are likely to benefit 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 be a steady tailwind.

Moreover, the integration of Engility buyout is expected to be a key driver this earnings season. In the last reported quarter, excluding Engility, revenues dipped 2.8% year over year.

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

However, revenue dis-synergies due to the elimination of prime sub-duplicate revenues persist as a headwind. Further, higher interest expenses are an overhang on the bottom line.

Science Applications International Corporation Price and EPS Surprise

Science Applications International Corporation Price and EPS Surprise

Science Applications International Corporation price-eps-surprise | Science Applications International Corporation Quote

What Our Model Says

The proven Zacks model clearly shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has maximum chances of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. 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 #3, which increases the predictive power of ESP. However, its Earnings ESP of 0.00% in the combination makes surprise prediction difficult.

Stocks to Consider

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

General Mills, Inc. GIS has an Earnings ESP of +0.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

EastGroup Properties, Inc. EGP has an Earnings ESP of +0.35% and a Zacks Rank of 2.

Dril-Quip, Inc. DRQ has an Earnings ESP of +36.79% and is Zacks #2 Ranked.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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