Science Applications International Corp (SAIC) Stock Analysis and Metrics

Science Applications International

NASDAQ: SAIC

$118.99 ▲ +2.49 (+2.14%)

At close: Jul 24, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap5.09 Bn

P/E12.57

P/S0.70

Div. Yield0.01

ROIC (Qtr)0.01

Total Debt (Qtr)2.51 Bn

Revenue Growth (1y) (Qtr)1.55

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About

Science Applications International Corporation is a leading provider of technical engineering and mission and enterprise information technology services primarily to the United States government. The company focuses on large complex projects delivering higher end differentiated technology services and solutions that accelerate and transform secure and resilient digital environments through systems design development modernization integration and sustainment to drive enterprise and mission outcomes. Its end to end IT offerings span the entire spectrum of customer IT infrastructure. With a history exceeding fifty years the company serves all military forces including Army Air Force Navy Marines Coast Guard and Space Force as well as agencies such as the Department of War National Aeronautics and Space Administration Department of State Department of Justice Department of Homeland Security and members of the Intelligence Community. It operates through approximately one thousand seven hundred active contracts and task orders and employs roughly twenty three thousand personnel.

Science Applications International Corporation generates revenue by delivering a broad portfolio of services that include IT modernization digital engineering artificial intelligence mission systems support advisory training and simulation and ground vehicles support. These services are provided under various contract types such as cost reimbursement time and materials and firm fixed price agreements. The majority of its sales come from prime contracts with the United States government or subcontracts with other contractors working for the government. In fiscal years 2024 through 2026 approximately ninety eight percent of total revenue was attributable to United States government work with about fifty two percent coming from the Department of War forty six percent from Intelligence and other federal government agencies and the remainder from commercial state and local and international customers. The company’s revenue base is diversified across research and development operations and maintenance and other service lines.

The company operates through the following segments: Defense and Intelligence segment and Civilian segment.

• The Defense and Intelligence segment provides a diverse portfolio of national security solutions to the Department of War and the Intelligence Community of the United States government. Its offerings include IT modernization digital engineering artificial intelligence mission systems support advisory training simulation and ground vehicles support. The segment also focuses on specialized mission areas such as undersea dominance border of the future citizen experience all domain warfighting and next generation space. It delivers end to end services covering design development integration deployment management operations sustainment and security of the customer’s entire IT infrastructure.

• The Civilian segment supplies solutions to civilian markets encompassing federal state and local governments to support citizen well being border security and protection of lives. It integrates its services into public service missions that affect travel trade health and the economy. The segment’s capabilities span IT modernization digital engineering artificial intelligence mission systems support advisory training simulation and ground vehicles support. Like the Defense and Intelligence segment it provides end to end services that cover design development integration deployment management operations sustainment and security of the customer’s IT infrastructure.

Science Applications International Corporation holds a strong position as one of the largest pure play technology service providers to the United States government. Its principal competitors include the engineering and technical services divisions of major defense contractors such as General Dynamics Corporation Lockheed Martin Corporation Northrop Grumman Corporation and RTX Corporation. It also competes with dedicated government IT services firms like Booz Allen Hamilton Incorporated CACI International Incorporated Leidos Holdings Incorporated ManTech International Corporation Parsons Corporation Peraton and Serco Group plc. Additionally diversified commercial providers that offer government IT services such as Accenture plc AECOM Amentum Holdings Incorporated Deloitte and International Business Machines Corporation are part of the competitive landscape. The company’s advantages stem from enduring customer relationships and a mission oriented culture its full life cycle offerings significant scale and diversified contract base a technically skilled workforce led by experienced management and its use of repeatable methodologies and certified processes including ISO 9001 ISO IEC 27001 AS9100D certifications and CMMI DEV Maturity Level 3 accreditation. The Innovation Factory further enhances its ability to develop and deliver emerging technology solutions quickly.

The company’s customer base consists primarily of United States government entities. Specific customers named in the filing include the Department of War the Intelligence Community the National Aeronautics and Space Administration the Department of State the Department of Justice the Department of Homeland Security and the individual military branches Army Air Force Navy Marines Coast Guard and Space Force. Revenue data shows that about fifty two percent of sales come from the Department of War forty six percent from Intelligence and other federal government agencies and the remaining portion from commercial state local and international clients. This concentration underscores the company’s reliance on long term contracts with federal agencies and its deep expertise in serving mission critical needs across defense intelligence and civilian markets.

Investment Thesis

▲ Bull case

SAIC's strategic portfolio realignment toward higher-margin, mission-critical work represents a structural advantage that the market underestimates, as evidenced by the company's deliberate shift away from commoditized enterprise IT toward integrated hardware-software solutions. Management's focus on programs like the State Department's Evolve vehicle—a $10 billion ceiling over seven years where SAIC has secured positions on four of five work streams—provides a multi-year growth runway that is not yet fully reflected in current guidance. While the current Vanguard program generates approximately $250 million annually at above-average margins, Evolve offers the potential to significantly scale this addressable market, with task order ramp-up expected to begin in fiscal 2028 as the company de-risks the recompete over the next several quarters. This transition is supported by SAIC's demonstrated ability to win recompete opportunities in adjacent domains, such as the $200 million DHS port security win, which highlights its strength in blending software expertise with purpose-built hardware to meet mission-critical customer needs. The market appears to overemphasize near-term headwinds from the RITS roll-off while underappreciating the long-term value creation potential from these higher-value contract vehicles, particularly as civil segment margins have sustainably improved to 15% and are expected to persist due to favorable fixed-price and time-and-materials contract mix. Furthermore, SAIC's internal transformation initiative, Project Orbit, is designed to free investment capacity by reengineering cost structures, enabling the company to fund growth initiatives internally without relying on external capital—a capability that could accelerate margin expansion and organic growth beyond current expectations as EBITDA margins sustain levels above 10%.
The company's free cash flow generation capacity is significantly underappreciated, with management maintaining an outlook of greater than $600 million for the full year despite planned investments in growth areas such as next-generation command and control, legacy radar modernization, and autonomous systems. This outlook is supported by historical conversion rates and the anticipated roll-off of historical tax assets in fiscal 2028, which will further enhance cash flow per share to at least $13 in FY28. SAIC's disciplined capital allocation—evidenced by its opportunistic $400 million full-year buyback plan, of which $188 million was executed in Q1—combined with its focus on internal investments through Project Orbit, creates a powerful compounding effect: as EBITDA improves, leverage naturally delevers from the current 3.1x, reducing financial risk while increasing equity value. The market appears to view SAIC as a stagnant defense contractor dependent on budget cycles, but the company's ability to generate consistent free cash flow, coupled with its strategic focus on high-velocity mission areas where appropriations are flowing (e.g., Navy, Army next-gen C4ISR, and space/intel programs), provides a buffer against near-term volatility. Additionally, the improving book-to-bill ratio of 1.1x for the quarter and 1.0x on a trailing 12-month basis—despite a smaller, more focused pipeline—indicates improved bidding discipline and win rates in targeted areas, suggesting that organic growth may reaccelerate sooner than anticipated as the portfolio realignment takes hold and higher-value programs begin to scale.
On-contract growth (OCG) is poised to exceed management's conservative 2%-3% forecast for FY27 due to the accelerating ramp of previously delayed programs, with half of the anticipated OCG deriving from initiatives that scaled slower than expected in FY26 but are now annualizing at $400 million in the current quarter. Management acknowledged that these programs—such as advanced radar sustainment, loitering munitions production, and data fusion initiatives—are benefiting from elevated operational tempo driven by ongoing geopolitical conflicts, which are increasing demand for rapid prototyping, upscaling, and integrated hardware-software solutions. The company's historical OCG rates of 6%-8% in FY24-FY25 suggest that the current guidance may be overly pessimistic, particularly as SAIC continues to invest in areas where it holds a competitive advantage, such as the intersection of hardware and software in legacy systems modernization (e.g., GMAS radar sustainment) and AI-enhanced decision-making tools. Furthermore, the civil segment's margin expansion to 15%—supported by outcome-based contracts and a strategic shift away from low-margin, commoditized IT work—provides a stable foundation for reinvestment into higher-growth areas, with management noting that the business is positioned to operate consistently at this level. The market fails to recognize that SAIC's focus on mission-critical, non-commoditized work not only insulates it from pricing pressure but also aligns with long-term government spending priorities in areas like cyber resilience, AI integration, and autonomous systems, where budget growth is expected to outpace overall defense spending.

SAIC's strategic portfolio realignment toward higher-margin, mission-critical work represents a structural advantage that the market underestimates, as evidenced by the company's deliberate shift away from commoditized enterprise IT toward integrated hardware-software solutions. Management's focus on programs like the State Department's Evolve vehicle—a $10 billion ceiling over seven years where SAIC has secured positions on four of five work streams—provides a multi-year growth runway that is not yet fully reflected in current guidance. While the current Vanguard program generates approximately $250 million annually at above-average margins, Evolve offers the potential to significantly scale this addressable market, with task order ramp-up expected to begin in fiscal 2028 as the company de-risks the recompete over the next several quarters. This transition is supported by SAIC's demonstrated ability to win recompete opportunities in adjacent domains, such as the $200 million DHS port security win, which highlights its strength in blending software expertise with purpose-built hardware to meet mission-critical customer needs. The market appears to overemphasize near-term headwinds from the RITS roll-off while underappreciating the long-term value creation potential from these higher-value contract vehicles, particularly as civil segment margins have sustainably improved to 15% and are expected to persist due to favorable fixed-price and time-and-materials contract mix. Furthermore, SAIC's internal transformation initiative, Project Orbit, is designed to free investment capacity by reengineering cost structures, enabling the company to fund growth initiatives internally without relying on external capital—a capability that could accelerate margin expansion and organic growth beyond current expectations as EBITDA margins sustain levels above 10%.
The company's free cash flow generation capacity is significantly underappreciated, with management maintaining an outlook of greater than $600 million for the full year despite planned investments in growth areas such as next-generation command and control, legacy radar modernization, and autonomous systems. This outlook is supported by historical conversion rates and the anticipated roll-off of historical tax assets in fiscal 2028, which will further enhance cash flow per share to at least $13 in FY28. SAIC's disciplined capital allocation—evidenced by its opportunistic $400 million full-year buyback plan, of which $188 million was executed in Q1—combined with its focus on internal investments through Project Orbit, creates a powerful compounding effect: as EBITDA improves, leverage naturally delevers from the current 3.1x, reducing financial risk while increasing equity value. The market appears to view SAIC as a stagnant defense contractor dependent on budget cycles, but the company's ability to generate consistent free cash flow, coupled with its strategic focus on high-velocity mission areas where appropriations are flowing (e.g., Navy, Army next-gen C4ISR, and space/intel programs), provides a buffer against near-term volatility. Additionally, the improving book-to-bill ratio of 1.1x for the quarter and 1.0x on a trailing 12-month basis—despite a smaller, more focused pipeline—indicates improved bidding discipline and win rates in targeted areas, suggesting that organic growth may reaccelerate sooner than anticipated as the portfolio realignment takes hold and higher-value programs begin to scale.
On-contract growth (OCG) is poised to exceed management's conservative 2%-3% forecast for FY27 due to the accelerating ramp of previously delayed programs, with half of the anticipated OCG deriving from initiatives that scaled slower than expected in FY26 but are now annualizing at $400 million in the current quarter. Management acknowledged that these programs—such as advanced radar sustainment, loitering munitions production, and data fusion initiatives—are benefiting from elevated operational tempo driven by ongoing geopolitical conflicts, which are increasing demand for rapid prototyping, upscaling, and integrated hardware-software solutions. The company's historical OCG rates of 6%-8% in FY24-FY25 suggest that the current guidance may be overly pessimistic, particularly as SAIC continues to invest in areas where it holds a competitive advantage, such as the intersection of hardware and software in legacy systems modernization (e.g., GMAS radar sustainment) and AI-enhanced decision-making tools. Furthermore, the civil segment's margin expansion to 15%—supported by outcome-based contracts and a strategic shift away from low-margin, commoditized IT work—provides a stable foundation for reinvestment into higher-growth areas, with management noting that the business is positioned to operate consistently at this level. The market fails to recognize that SAIC's focus on mission-critical, non-commoditized work not only insulates it from pricing pressure but also aligns with long-term government spending priorities in areas like cyber resilience, AI integration, and autonomous systems, where budget growth is expected to outpace overall defense spending.

▼ Bear case

SAIC faces significant near-term headwinds from the unsuccessful RITS recompete, which is now expected to roll off in Q3 FY27—later than initially modeled—creating a $200 million revenue shortfall that will contribute approximately a 3% drag on organic growth in both Q3 and Q4. This roll-off is not merely a temporary setback but reflects ongoing weakness in the commoditized enterprise IT market, where recompete win rates remain under pressure despite management's hope for a return to the 90% range. The company's acknowledgment that "RFPs and submissions are still slowed by environmental factors" and its reference to "unknown unknowns" that impacted FY26 suggest persistent external volatility—potentially tied to budget uncertainty in an election year—that could disrupt the anticipated flow of appropriations in the second half of FY27. While management cites improving OCG and strong book-to-bill ratios, the qualified pipeline has contracted by approximately 25% year-over-year, with the vast majority of this reduction occurring in the enterprise IT portfolio, signaling a structural decline in demand for SAIC's traditional offerings in this segment. The market may be overlooking the risk that the company's strategic pivot toward higher-value segments—such as mission engineering and hardware-software integration—may not offset the scale of losses from legacy IT contracts quickly enough, particularly given the long sales cycles and competitive intensity in emerging domains like autonomous systems and AI-augmented decision-making.
Despite margin improvements driven by cost efficiency and a one-time $12 million venture investment gain, SAIC's core operational profitability remains fragile, with adjusted EBITDA margin guidance only modestly raised to 10.1%-10.3%—a level that still relies heavily on non-recurring benefits and cost-cutting rather than sustainable top-line growth. The civil segment's 15% margin, while impressive, is concentrated in a narrow subset of contracts (e.g., Department of State, DHS, DOJ) and may not be scalable across the broader portfolio, especially as the company shifts focus away from the larger enterprise IT market that historically contributed significant revenue. Furthermore, management's admission that "we are starting to see some of that benefit come through" regarding margin thresholds suggests that the current outperformance may be premature and difficult to sustain without continued investment in bid capture and delivery excellence—areas that could be constrained by the company's capital-light approach and reluctance to make "huge large scale investments in building new large plants." The market may be overestimating the persistence of margin expansion, particularly if the benefits from Project Orbit—designed to free investment capacity through internal reengineering—fail to materialize as expected, leaving SAIC unable to fund growth initiatives internally while facing increasing pressure to invest in competitive areas like AI and multimodal data fusion to maintain relevance.
SAIC's capital allocation strategy, while disciplined, risks underinvestment in critical growth areas due to its aversion to large-scale capital expenditures and overreliance on opportunistic share buybacks as a primary use of cash. The company's $400 million annual buyback target, though supported by strong free cash flow, may signal a lack of compelling internal investment opportunities, particularly as management emphasizes "tuck-in M&A" and internal investments through Project Orbit rather than transformative deals. This approach could leave SAIC vulnerable to competitors who are willing to make bolder bets in high-growth areas such as space systems, cyber resilience, and autonomous weapons platforms—domains where the government is increasingly seeking integrated end-to-end solutions. Additionally, the company's dependence on recompete wins in programs like Vanguard (where it seeks to hold volume) and Evolve (where it bids on four of five work streams) introduces execution risk, as success is not guaranteed despite past performance. The market may be ignoring the possibility that SAIC's selective strategy—while prudent—could result in a narrowing of its addressable market over time, especially if it fails to win expanded scope on Evolve or if demand for its legacy hardware-software integration work (e.g., Mark 48 torpedo, radar sustainment) plateaus as customers pursue alternative sourcing strategies or in-house capabilities. Without a clear path to reaccelerate organic growth beyond the current 0.5% Q1 result, SAIC risks becoming a value trap where capital is returned to shareholders rather than reinvested for future growth, ultimately limiting long-term equity appreciation.

SAIC faces significant near-term headwinds from the unsuccessful RITS recompete, which is now expected to roll off in Q3 FY27—later than initially modeled—creating a $200 million revenue shortfall that will contribute approximately a 3% drag on organic growth in both Q3 and Q4. This roll-off is not merely a temporary setback but reflects ongoing weakness in the commoditized enterprise IT market, where recompete win rates remain under pressure despite management's hope for a return to the 90% range. The company's acknowledgment that "RFPs and submissions are still slowed by environmental factors" and its reference to "unknown unknowns" that impacted FY26 suggest persistent external volatility—potentially tied to budget uncertainty in an election year—that could disrupt the anticipated flow of appropriations in the second half of FY27. While management cites improving OCG and strong book-to-bill ratios, the qualified pipeline has contracted by approximately 25% year-over-year, with the vast majority of this reduction occurring in the enterprise IT portfolio, signaling a structural decline in demand for SAIC's traditional offerings in this segment. The market may be overlooking the risk that the company's strategic pivot toward higher-value segments—such as mission engineering and hardware-software integration—may not offset the scale of losses from legacy IT contracts quickly enough, particularly given the long sales cycles and competitive intensity in emerging domains like autonomous systems and AI-augmented decision-making.
Despite margin improvements driven by cost efficiency and a one-time $12 million venture investment gain, SAIC's core operational profitability remains fragile, with adjusted EBITDA margin guidance only modestly raised to 10.1%-10.3%—a level that still relies heavily on non-recurring benefits and cost-cutting rather than sustainable top-line growth. The civil segment's 15% margin, while impressive, is concentrated in a narrow subset of contracts (e.g., Department of State, DHS, DOJ) and may not be scalable across the broader portfolio, especially as the company shifts focus away from the larger enterprise IT market that historically contributed significant revenue. Furthermore, management's admission that "we are starting to see some of that benefit come through" regarding margin thresholds suggests that the current outperformance may be premature and difficult to sustain without continued investment in bid capture and delivery excellence—areas that could be constrained by the company's capital-light approach and reluctance to make "huge large scale investments in building new large plants." The market may be overestimating the persistence of margin expansion, particularly if the benefits from Project Orbit—designed to free investment capacity through internal reengineering—fail to materialize as expected, leaving SAIC unable to fund growth initiatives internally while facing increasing pressure to invest in competitive areas like AI and multimodal data fusion to maintain relevance.
SAIC's capital allocation strategy, while disciplined, risks underinvestment in critical growth areas due to its aversion to large-scale capital expenditures and overreliance on opportunistic share buybacks as a primary use of cash. The company's $400 million annual buyback target, though supported by strong free cash flow, may signal a lack of compelling internal investment opportunities, particularly as management emphasizes "tuck-in M&A" and internal investments through Project Orbit rather than transformative deals. This approach could leave SAIC vulnerable to competitors who are willing to make bolder bets in high-growth areas such as space systems, cyber resilience, and autonomous weapons platforms—domains where the government is increasingly seeking integrated end-to-end solutions. Additionally, the company's dependence on recompete wins in programs like Vanguard (where it seeks to hold volume) and Evolve (where it bids on four of five work streams) introduces execution risk, as success is not guaranteed despite past performance. The market may be ignoring the possibility that SAIC's selective strategy—while prudent—could result in a narrowing of its addressable market over time, especially if it fails to win expanded scope on Evolve or if demand for its legacy hardware-software integration work (e.g., Mark 48 torpedo, radar sustainment) plateaus as customers pursue alternative sourcing strategies or in-house capabilities. Without a clear path to reaccelerate organic growth beyond the current 0.5% Q1 result, SAIC risks becoming a value trap where capital is returned to shareholders rather than reinvested for future growth, ultimately limiting long-term equity appreciation.

Segments Breakdown of Revenue (2026)

Peer Comparison

Companies in the Information Technology Services

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	IBM	International Business Machines Corp	193.88 Bn	8,812.83	2.81	61.99 Bn
2	ACN	Accenture plc	84.94 Bn	10.70	1.16	5.14 Bn
3	GDS	GDS Holdings Ltd	50.55 Bn	126.44	29.45	-
4	INFY	Infosys Ltd	44.05 Bn	0.29	0.05	-
5	GIB	Cgi Inc	41.25 Bn	0.32	3.47	2.65 Bn
6	FIS	Fidelity National Information Services, Inc.	20.63 Bn	134.81	1.80	16.99 Bn
7	CTSH	Cognizant Technology Solutions Corp	20.39 Bn	9.24	0.95	0.57 Bn
8	WIT	Wipro Ltd	18.65 Bn	12.56	1.80	1.88 Bn

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Investment Thesis

Segments Breakdown of Revenue (2026)

Segments Breakdown of Revenue (2026)

Peer Comparison

Research Tools

Developers

About

Investment Thesis

Segments Breakdown of Revenue (2026)

Segments Breakdown of Revenue (2026)

Peer Comparison

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