Science Applications (85S) AI Stock Analysis

Science Applications

(BX Swiss:85S)

Rating:―N/A

Action:N/A

Date:―

No summary available

Positive Factors

Strong Cash GenerationTTM operating cash flow of $660M and free cash flow of $619M, with FCF at about 0.94x net income, indicates earnings are converting into cash reliably. This supports internal funding for contract delivery, technology investment, shareholder returns, and resilience across the next several quarters.

Negative Factors

Margin CompressionLower net and EBIT margins than in 2024 indicate that SAIC has lost some operating leverage or faced higher costs. If this pattern persists, it could constrain earnings growth from otherwise stable revenue and reduce the cash available for investment, debt management, and returns.

Science Applications Business Overview & Revenue Model

Company Description

Science Applications International Corporation (SAIC), a U.S.-based firm, specializes in providing a wide array of advanced technical, engineering, and comprehensive information technology (IT) solutions. Its diverse offerings span crucial areas such...

Science Applications Earnings Call Summary

Earnings Call Date:May 31, 2026(Q1-2027)|Next Earnings Date:Dec 06, 2026

Earnings Call SentimentPositive

The call emphasized strong operational execution in Q1 — record margins, robust adjusted EBITDA ($222M), improved civil margins (~15%), upgraded EPS and EBITDA guidance, solid free cash flow generation and active capital return via buybacks. Management remains cautious on sales for FY27 due to recompete timing (notably RITS), a smaller/reshaped enterprise IT pipeline, slower RFP timing and election-year/appropriations uncertainty. While some margin upside in the quarter was aided by a one-time venture gain, underlying cash flow and deleveraging progress are clear. Overall, the company appears to be making deliberate strategic changes (portfolio and pipeline focus) and has momentum on margins and cash, but faces identifiable timing and organic growth risks that management is actively managing.

Positive Updates

Record Margin and Strong Adjusted EBITDA

Fiscal Q1 adjusted EBITDA of $222 million and a company-record margin driven by strong program execution; sale of a venture investment contributed roughly $12 million, adding ~60 basis points to EBITDA margin and about $0.20 to EPS.

Negative Updates

RITS Recompete Headwind and Timing Shift

Unsuccessful RITS recompete expected to be a ~$200 million headwind in FY27; roll-off timing shifted later (now likely to impact Q3 rather than Q2) due to a protest, creating sequential timing pressure in the second half of the year.

Company Guidance

SAIC maintained its FY2027 sales guidance but raised profitability and EPS outlook after a strong F1Q: Q1 revenue $1.9B (+0.5% organic), adjusted EBITDA $222M (included $12M venture IPO gain that added ~60bps to EBITDA margin and ~$0.20 to EPS), adjusted diluted EPS $3.23, free cash flow $118M, net leverage down to 3.1x, net bookings $2.1B (book‑to‑bill 1.1x; 1.0x TTM) and a qualified pipeline of ~$85B. Management raised full‑year adjusted EBITDA margin guidance to 10.1%–10.3% (up ~20bps), increased adjusted EPS guidance ~4% to $9.90–$10.10, reiterated FCF >$600M and at least $14 FCF/share in FY27 (and ≥$13 in FY28), expects on‑contract growth of 2%–3%, will revisit organic growth (previous guide −2% to −4%) at Q2, repurchased $188M this quarter toward a ~ $400M buyback plan, and said the ~$200M RITS recompete headwind will likely roll off in Q3 (implying roughly a ~3% organic drag in each of Q3 and Q4).

Science Applications Risk Analysis

Science Applications disclosed 29 risk factors in its most recent earnings report. Science Applications reported the most risks in the "Legal & Regulatory" category.

Legal & Regulatory - Litigation, compliance, new legislation, and taxation risks

Latest Risks Added

0 New Risks

Science Applications Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

CH:85S against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACN	84Outperform	$152.63B	18.90	26.77%	2.56%	6.47%	11.19%
IBM	79Outperform	$243.66B	21.66	32.95%	2.61%	6.83%	39.80%
LDOS	78Outperform	$17.94B	13.23	27.55%	1.20%	3.41%	1.68%
CACI	72Outperform	$15.01B	27.57	12.37%	―	10.12%	7.58%
PSN	67Neutral	$5.35B	36.73	5.58%	―	-2.67%	-61.86%
Sector *	61Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

CH:85S and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
ACN	Accenture Plc	258.24	18.16	7.56%
CACI	Caci International	675.62	111.48	19.76%
IBM	International Business Machines Corporation	257.81	-39.20	-13.20%
LDOS	Leidos Holdings Inc	142.98	-47.86	-25.08%
PSN	Parsons Corp	50.69	-29.05	-36.43%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Science Applications AI Stock Analysis