Science Applications (SAIC) to Realign Business Structure
Science Applications SAIC recently unveiled its plan to reorganize its business structure, moving away from its current set up of two large divisions – Defense & Civilian Sector and National Security & Space Sector. Instead, it will establish five new smaller business groups – Army, Navy, Air Force and Combatant Commands, Space and Intelligence, and Civilian Group. The Civilian Group will consist of the present Civilian, Health and State and Local businesses.
The restructuring is scheduled to take effect on Feb 3, 2024. Josh Jackson, Barbara Supplee, Vinnie DiFronzo and David Ray that head the Army, Navy, Air Force and Combatant Commands, and Space and Intelligence business groups, respectively, will report directly to Townes-Whitley.
SAIC is looking for a leader outside the company to head the Civilian business group. Bob Genter, president of Defense and Civilian Sector, and Michael LaRouche, president of National Security and Space Sector, will leave Science Applications on Feb 2, 2024.
Science Applications International Corporation Price and Consensus
Science Applications International Corporation price-consensus-chart | Science Applications International Corporation Quote
In 2023, 2022 and 2021, 98% of SAIC's total revenues were directly or indirectly derived from the U.S. government through prime contracts or subcontracts with other contractors. A major portion of the company's customer base consists of various government agencies, including the U.S. military branches (Army, Air Force, Navy, Marines and Coast Guard), the U.S. Department of Homeland Security, the National Aeronautics and Space Administration, and the U.S. Department of State.
The recent decision to reorganize its business will help SAIC better align with its four strategic areas, namely portfolio, go-to-market, culture and brand. This will benefit Science Applications by allowing it to refocus on its strengths and expertise and reallocate resources toward strategic goals. Similarly, it will result in better alignment of the departments with their customer needs.
SAIC is benefiting from higher demand for its technology solutions due to the ongoing digital transformation wave across the defense, space, intelligence and civilian markets. The strong performance of its contract portfolio is also a tailwind.
The company’s third-quarter fiscal 2024 revenues increased 10.6% when adjusted for the impact of the logistics and supply-chain management division divesture and the deconsolidation of the Forfeiture Support Associates joint venture. A ramp-up in existing and new contracts primarily drove the upside.
Adjusted earnings for the quarter soared 19% to $2.27 per share. The robust year-over-year growth in the bottom line was primarily driven by solid operating performance along with the benefits of a lower tax rate and reduction in outstanding share count.
Zacks Rank and Other Stocks to Consider
Science Application sports a Zacks Rank #1 (Strong Buy) at present. Shares of SAIC have risen15.9% year to date.
Some other top-ranked stocks from the broader technology sector are Intel INTC, Upwork UPWK and Bel Fuse BELFB, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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The Zacks Consensus Estimate for Upwork's fourth-quarter 2023 earnings has remained unchanged for the past 90 days at 17 cents per share. For fiscal 2023, the bottom-line estimate has moved north 11 cents to 48 cents in the past 60 days.
UPWK’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 326.89%. Shares of UPWK have risen 34.2% year to date.
The Zacks Consensus Estimate for Bel Fuse’s fourth-quarter fiscal 2023 earnings has moved north 38 cents to $1.44 per share in the past 60 days. For fiscal 2023, the bottom-line estimate has increased 72 cents to $6.28 in the past 60 days.
BELFB’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 56.92%. Shares of BELFB have risen 85.1% year to date.
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