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What's in Store for Science Applications (SAIC) Q4 Earnings?

Zacks Equity Research

Science Applications International Corporation SAIC is set to report fourth-quarter fiscal 2019 earnings on Mar 28.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 21.9%.

For the fiscal fourth quarter, the Zacks Consensus Estimate for revenues is pegged at $1.18 billion, reflecting a 4.17% improvement year over year. For earnings, the consensus estimate stands at 89 cents, indicating a decline of 23.28% year over year.

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

Factors to Consider

SAIC continues to benefit from a strong performance of its contract portfolio. The company’s capability to sustain its existing contracts coupled with newly awarded contracts across the customer portfolio is a tailwind. Moreover, higher number of orders in its supply chain is a positive.

Further, achieving the AWS Government Competency Status last November is a critical advancement in the company’s cloud practice. The status boosts the confidence of SAIC government clients regarding the effective integration of SAIC’s technical expertise and knowledge of its AWS capabilities and services.

During the fiscal fourth quarter, the company was awarded a $57-million worth Seaport-e task order with a year-long base period and four more optional years by the U.S. Navy. This task order followed another Seaport-e task order worth $37 million, awarded to SAIC for providing the NSWC (Naval Surface Warfare Center), Panama City with its mission support services.

The company also completed the acquisition of Engility in the quarter under discussion, which is likely to help expand its market opportunity and drive its revenue and costs synergies.

However, it is feared that the partial government shutdown might have delayed new awards and contract wins for the company. Therefore, it remains to be seen how much impact the shutdown had on its top line.

Science Applications International Price and EPS Surprise

Science Applications International Corporation Price and EPS Surprise | Science Applications International Corporation Quote

 

What Our Model Says

Our proven Zacks model clearly indicates that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good 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.

SAIC has a Zacks Rank #3, which increases the predictive power of ESP but its Earnings ESP of -1.72% in the combination leaves surprise prediction inconclusive this earnings season.

Stocks with Favorable Combination

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

Gogo Inc. GOGO has an Earnings ESP of +2.36% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

MeetMe, Inc. MEET has an Earnings ESP of +5.88% and is a #2 Ranked stock.

Akamai Technologies, Inc. AKAM has an Earnings ESP of +5.167% and a Zacks Rank of 2.

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