Home Most Popular Investing Unlocking the Vault: SAIC’s Victory on Intelligence Contracts Sparks Growth Surge in U.S. Market

Unlocking the Vault: SAIC’s Victory on Intelligence Contracts Sparks Growth Surge in U.S. Market

Unlocking the Vault: SAIC’s Victory on Intelligence Contracts Sparks Growth Surge in U.S. Market

A Breakthrough Moment for SAIC

Science Applications International Corporation (SAIC) has recently clinched an impressive $284 million in contracts from the U.S. intelligence community during the initial two months of 2024. These triumphs underscore SAIC’s visionary strategy to amplify its mission, IT, and engineering services within the intelligence domain.

To further fortify their competitive positioning, David Ray, the executive vice president of the Space and Intelligence Business Group at Science Applications, articulates the company’s intention to harness these achievements for reinforcing customer bonds and diversifying service portfolios.

Groundbreaking Wins for SAIC

Of particular note are the two contracts valued over $100 million each, alongside the inaugural task order beneath a single-award indefinite delivery and quantity contract. These contracts span diverse spheres such as data, AI, and engineering, highlighting SAIC’s unwavering dedication to providing holistic solutions to the intelligence community.

SAIC’s recent merger of intelligence and space divisions aims to cultivate increased collaboration and synergy, particularly in pivotal markets like the National Reconnaissance Office and National Geospatial-Intelligence Agency.

Government Contracts Pave the Way

Science Applications has maintained a vigilant focus on the federal government segment, with aspirations to broaden its market share. Over the past three consecutive years – 2021, 2022, and 2023 – nearly 98% of SAIC’s total revenues have stemmed from contracts with the U.S. government. The clientele includes a spectrum of government bodies such as the Department of Homeland Security, NASA, the Department of State, and military branches like the Navy, Air Force, and Army.

The stability and reduced revenue volatility afforded by clients like the military and various government agencies equips SAIC with a steady revenue stream, thanks to projects that extend over multiple years upon approval, promising greater revenue predictability.

Leveraging on the augmented federal government expenditure outlined in the latest budget proposal is poised to expedite contract awards and foster further growth on SAIC’s top line. The escalating demand for technology solutions, fuelled by the ongoing digital transformation across defense, space, intelligence, and civilian sectors, presents a ripe opportunity for Science Applications to capitalize on.

Remarkably, as of November 3, 2023, SAIC boasted a robust contract backlog of $23.1 billion, a testament to the company’s strategic business development, operational prowess, and unwavering commitment to customer satisfaction.

Financial Performance & Outlook

In the third quarter of fiscal 2024, Science Applications disclosed a 10.6% surge in revenues, underscoring the propitious influence of existing and novel contracts. Adjusted earnings per share witnessed a 19% upswing, indicative of the robust operational performance, a diminished tax rate, and a reduction in outstanding share count.

Final Thoughts on SAIC

Presently, Science Applications holds a Zacks Rank #2 (Buy). Year to date, the shares of SAIC have soared by 15.2%.

Other notable players in the broader technology arena encompass NVIDIA Corporation, Meta Platforms, and Amazon.com. NVIDIA and Meta boast a Zacks Rank #1 (Strong Buy) each, while Amazon currently carries a Zacks Rank #2. These stocks reflect the resilience and acumen prevalent in the tech sector, with promising growth trajectories for investors to ponder upon.

Considering the market consensus, NVIDIA’s fiscal 2025 earnings are anticipated to witness a 79.2% year-on-year growth, with a robust long-term estimated earnings growth rate of 29.7%. In parallel, Meta is predicted to realize a 34.1% increase in 2024 earnings compared to the previous year, underscoring a long-term earnings growth projection of 19.5%. Subsequently, Amazon is slated to report a notable year-over-year surge of 40.7% in 2024 earnings, buttressed by a long-term earnings growth rate of 28.1%.

The confluence of recent achievements, ongoing strategic pursuits, and promising financial metrics positions SAIC as a formidable force in the evolving landscape of technology and intelligence services, ensuring continued growth and value creation for stakeholders.

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