Science Applications Stock Plunges 13% as Q1 Earnings Miss Estimates

Yahoo

3 days ago

Science Applications International SAIC delivered its first-quarter fiscal 2026 results, where the company reported non-GAAP earnings of $1.92 per share, missing the Zacks Consensus Estimate of $2.14 by 10.28%. Furthermore, the bottom line remained flat year over year, as a lower share count offset the impact of a higher tax rate and lower adjusted EBITDA during the quarter.Science Applications' earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with an average surprise of 12.18%.Science Applications' fiscal first-quarter revenues rose 2% year over year to $1.877 billion, which marginally surpassed the Zacks Consensus Estimate of $1.864 billion by 0.71%. The top-line growth was primarily driven by ramp-up in volume on new and existing contracts, partially offset by contract completions.SAIC shares lost 13% on Monday after a weaker-than-expected bottom-line performance in the fiscal first quarter. The company missed earnings estimates and reported flat year-over-year profits, despite modest revenue growth. Year to date, SAIC stock is down 9.8%, underperforming the Computers – IT Services industry's 7.2% decline, as the latest results appear to have weighed on investor sentiment. Still, management reaffirmed its full-year outlook, signalling confidence in the company's long-term trajectory.
Science Applications International Corporation price-consensus-eps-surprise-chart | Science Applications International Corporation Quote
Segment-wise, revenues from Defence and Intelligence, which accounted for 76.3% of revenues, amounted to $1.43 billion and decreased 0.2% year over year. Civilian revenues, which constitute 23.7% of revenues, totaled $444 million and rose 8% year over year.Net bookings for the quarter were approximately $2.4 billion, which reflected a book-to-bill ratio of 1.3. The company's trailing 12-month book-to-bill ratio was 0.8 at the end of the fiscal first quarter. SAIC's estimated backlog at the end of the quarter was approximately $22.3 billion. Of the total backlog amount, approximately $3.3 billion was funded.Selling, general and administrative (SG&A) expenses decreased 4.7% to $89 million. SG&A expenses, as a percentage of revenues, increased to 4.7% from 4.6% in the year-ago quarter.Non-GAAP operating income decreased year over year to $158 million from the year-ago quarter's operating income of $165 million. The non-GAAP operating margin contracted 50 basis points (bps) year over year to 8.4%. Adjusted EBITDA declined 5.42% to $157 million. Adjusted EBITDA margin for the quarter was 8.4% compared with 9% for the prior-year quarter. Margin performance was impacted by the typical seasonality of investments, including healthy submit volumes and higher costs on a fixed price program in the space business.
Science Applications ended the fiscal first quarter with cash and cash equivalents of $47 million, down from the previous quarter's $56 million.As of May 2, 2025, Science Applications' long-term debt (net of the current portion) was $1.876 billion compared with $1.907 billion as of Jan. 31, 2025.The company generated operating and used free cash flows of $100 million and $44 million, respectively, in the fiscal first quarter.During the fiscal first quarter, Science Applications repurchased shares worth $125 million and paid $19 million in dividends.
Science Applications reaffirms its fiscal 2026 revenues in the range of $7.60-$7.75 billion and adjusted earnings in the $9.10-$9.30 band. The Zacks Consensus Estimate for fiscal 2026 revenues and non-GAAP earnings is pegged at $7.67 billion and $9.19 per share, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)The company projects its adjusted EBITDA in the band of $715-$735 million and the adjusted EBITDA margin to be approximately 9.4-9.6%. SAIC expects its free cash flow to be in the band of $510-$530 million.
Currently, SAIC carries a Zacks Rank #3 (Hold).Paylocity Holding PCTY, StoneCo STNE and Trivago TRVG are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector.PCTY, STNE and TRVG sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today's Zacks #1 Rank stocks here.PCTY shares have declined 4.5% year to date. The Zacks Consensus Estimate for PCTY's full-year 2025 earnings is pegged at $7.01 per share, up by 5.4% over the past 30 days, indicating an increase of 6.7% from the year-ago quarter's reported figure.STNE shares have surged 77.4% year to date. The Zacks Consensus Estimate for STNE's full-year 2025 earnings is pegged at $1.43 per share, up by 3.62% over the past 30 days, indicating an increase of 5.93% from the year-ago quarter's reported figure.TRVG shares have surged 95% year to date. The Zacks Consensus Estimate for TRVG's full-year 2025 earnings per share is pegged at 10 cents, unchanged over the past 30 days, indicating a rise of 11.11% from the year-ago quarter's reported figure.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Science Applications International Corporation (SAIC) : Free Stock Analysis Report
Paylocity Holding Corporation (PCTY) : Free Stock Analysis Report
Trivago N.V. ADS (TRVG) : Free Stock Analysis Report
StoneCo Ltd. (STNE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research