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Can Science Applications (SAIC) Deliver a Beat in Q1 Earnings?

Zacks Equity Research

Science Applications International Corporation SAIC is set to report first-quarter fiscal 2020 earnings on Jun 6.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 18.99%.

In the last reported quarter, the company delivered earnings of $1.17 per share, which beat the Zacks Consensus Estimate of 89 cents but declined 15% year over year.

Revenues rose 6% from the year-ago quarter to $1.19 billion and also outpaced the Zacks Consensus Estimate of $1.18 billion.

For the fiscal first quarter, the Zacks Consensus Estimate for revenues is pegged at $1.61 billion, indicating a 36.84% improvement from the year-ago reported figure. For earnings, the consensus estimate stands at $1.18, suggesting a rise of 4.42% from the prior-year reported number.

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

Factors to Consider

Science Applications’ upcoming quarterly results are likely to benefit from higher orders in supply chain and continued contract wins. The company’s capability to sustain its existing contracts coupled with the newly awarded ones across the customer portfolio is likely to remain a tailwind.

During the quarter under review, the company secured a $37-million and a $57-million task order as part of the Seaport-e program. Moreover, NASA awarded the company the Safety and Mission Assurance Engineering Contract II worth up to $292 million.

Further, Science Applications was awarded a position on the multiple award $535 million IT Services contract for the Defense Threat Reduction Agency.

The company’s top line is also likely to be driven by the acquisition of Engility, which yielded $98 million in the last reported quarter.

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 the Model Says

The quantitative Zacks model conclusively suggests that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has significant 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 has a Zacks Rank #3, which increases the predictive power of ESP, and an Earnings ESP of +2.82% in the combination shows that the company is likely to beat estimates this quarter to be reported.

Other Stocks to Consider

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

Gogo Inc. GOGO has an Earnings ESP of +2.37% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cisco Systems, Inc. CSCO has an Earnings ESP of +0.26% and is a #2 Ranked stock.

EPAM Systems, Inc. EPAM has an Earnings ESP of +0.06% and a Zacks Rank of 2.

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