Science Applications Q4 Earnings Beat Estimates, Revenues Miss

Science Applications International SAIC reported mixed results for the fourth quarter of fiscal 2026, wherein the bottom line surpassed the Zacks Consensus Estimate, but the top line missed the same. The company’s non-GAAP earnings of $2.62 per share beat the Zacks Consensus Estimate of $2.31 by 13.42%. The bottom line increased 2% from the year-ago quarter’s earnings of $2.57.

Science Applications' fiscal fourth-quarter revenues declined 5% year over year to $1.75 billion and missed the Zacks Consensus Estimate of $1.76 billion.

SAIC’s Q4 in Detail

Segment-wise, revenues from Defence and Intelligence, which accounted for 76.3% of revenues, amounted to $1.34 billion and decreased 1.8% year over year. Civilian revenues, which constitute 23.7% of revenues, totaled $415 million and plunged 13.2% year over year.

Science Applications International Corporation Price, Consensus and EPS Surprise

Science Applications International Corporation price-consensus-eps-surprise-chart | Science Applications International Corporation Quote

Net bookings were approximately $0.6 billion in the fourth quarter, which reflected a book-to-bill ratio of 0.3. The company’s trailing 12-month book-to-bill ratio was 1.1 at the end of the fiscal fourth quarter. SAIC’s estimated backlog at the end of the quarter was approximately $22.6 billion. Of the total backlog amount, approximately $3.6 billion was funded.

Selling, general and administrative (SG&A) expenses decreased 9.6% to $85 million. SG&A expenses, as a percentage of revenues, declined to 4.9% from 5.1% in the year-ago quarter.

Non-GAAP operating income increased year over year to $179 million from the year-ago quarter’s operating income of $176 million. The non-GAAP operating margin expanded 60 basis points (bps) year over year to 10.2%.

Adjusted EBITDA rose 2% to $181 million. Adjusted EBITDA margin for the quarter was 10.3% compared with 9.6% in the prior-year quarter.

Balance Sheet & Cash Flow Details of SAIC

Science Applications ended the fiscal fourth quarter with cash and cash equivalents of $182 million, significantly up from the previous quarter’s $45 million.

As of Oct. 31, 2025, Science Applications’ long-term debt (net of the current portion) was $2.47 billion compared with $2.48 billion as of Oct. 31, 2025.

The company generated operating and free cash flows of $258 million and $336 million, respectively, in the fiscal fourth quarter. In fiscal 2026, it generated operating and free cash flows of $609 million and $577 million, respectively.

During the fiscal fourth quarter, Science Applications repurchased shares worth $97 million and paid $17 million in dividends. In fiscal 2026, it bought back shares worth $422 million and paid $70 million in dividends.

SAIC Initiates Fiscal 2027 Guidance

Science Applications expects fiscal 2027 revenues between $7 billion and $7.2 billion. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $7.25 billion, indicating a year-over-year decline of 0.2%.

Adjusted EBITDA is anticipated to be in the range of $705-$715 million. Adjusted EBITDA margin expected to be in the 9.9-10.1% band. The company forecasts adjusted EPS in the range of $9.50-$9.70. The Zacks Consensus Estimate for the bottom line is pegged at $9.52 per share, indicating a year-over-year improvement of 11.4%.

Science Applications estimates free cash flow for fiscal 2026 to exceed $600 million.

SAIC’s Zacks Rank & Stocks to Consider

Currently, Science Applications carries a Zacks Rank #3 (Hold).

Cirrus Logic CRUS, FormFactor FORM and Lam Research LRCX are some better-ranked stocks that investors can consider from the broader Zacks Computer and Technology sector. Cirrus Logic, FormFactor and Lam Research each sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Cirrus Logic’s fiscal 2026 earnings has been revised upward by 4.5% to $8.89 per share over the past 30 days and suggests a year-over-year increase of 17.9%. Cirrus Logic shares have jumped 12.6% in the past six months.

The Zacks Consensus Estimate for FormFactor’s 2026 earnings has moved upward by 3 cents to $1.80 per share in the past 30 days, indicating a 38.5% year-over-year increase. FormFactor shares have soared 64.3% in the past six months.

The Zacks Consensus Estimate for Lam Research’s fiscal 2026 earnings has been revised down by 2 cents to $5.24 per share over the past 30 days, suggesting a year-over-year increase of 26.6%. Lam Research shares have surged 33.2% in the past six months.

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This article originally published on Zacks Investment Research (zacks.com).

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