Science Applications International Corp (SAIC), commonly known as SAIC, primarily performs IT services for government agencies. Among the specific services that it offers are AI integration, data organization and security. The company also helps its clients utilize cloud and cybersecurity solutions.
SAIC reported very strong financial results for its fiscal third quarter that ended on November 1. Also noteworthy is that the shares’ valuation is very low while they have dropped quite sharply in recent months. Given this combination, SAIC stock could be worth buying on weakness at this point.
More About SAIC’s Services
According to SAIC, it helps government agencies transfer their workloads to the cloud more quickly and safely. The firm also enables its clients to more effectively manage and optimize their cloud systems.
On the cybersecurity front, SAIC helps agencies implement “a zero trust strategy.” Moreover, the firm provides its clients with powerful, high-tech IT security systems, enabling them to meet all compliance requirements. The company’s Koverse zero-trust data platform stores and protects data, providing agencies with “multi-level security management” and “secure video storage.”
Finally, SAIC’s Tenjin platform provides a “ collaborative AI development, training and deployment environment.” As a result, SAIC’s clients can utilize Tenjin to both create and test their AI models. And even those who are not data scientists can extensively utilize Tenjin, according to SAIC.
Recent Developments
On December 19, SAIC received a contract with an estimated value of $171 million from Texas’ Department of Information Resources (DIR). Under the deal, the company will help the state protect its networks from cybersecurity attacks. More specifically, the firm will assist DIR with “maintaining and deploying security tools; monitoring and managing the overall security environments; assessing, (and) managing, and mitigating risks.” Additionally, SAIC will help ensure that DIR is complying with all applicable rules and laws.
On December 16, the firm was given a “prime position” in the Pentagon’s $1.8 billion Personnel and Readiness Infrastructure Support Management (PRISM) initiative. One of SAIC’s main roles under the deal will be to enhance the Pentagon’s preparedness, using “data integration and instantaneous analytics.”
Speaking on the company’s third-quarter earnings call on dec. 5, CEO Toni Townes-Whitley said she expects the incoming Trump administration to focus on utilizing technology to make Washington more efficient. SAIC is well-positioned to partner with government agencies in order to foster change via technology, Townes-Whitley added.
Fiscal Q3 Results and Valuation
Last quarter, SAIC’s revenue rose 4.3% versus the same period a year earlier to $1.98 billion, while its operating income advanced 12% year-over-year to $160 million. Also impressively, its earnings per share, excluding certain items, climbed 15% YOY to $2.61.
SAIC stock is changing hands at a forward price-earnings ratio of 16.4 times. That’s well below the average forward P/E ratio for the Research and Consulting Services segment which stands at 22.8 times.
In the three months that ended on December 20, the shares dropped 18%. Given the combination of the company’s strong Q3 results, the recent decline of SAIC stock and its low valuation, the shares may be worth buying on weakness.
