SAIC Surges After Q3 Profit Beat and Raised Full-Year Forecast
The government IT contractor's strong contract wins and improved margin performance signal growing momentum, challenging Wall Street's neutral stance.
Shares of Science Applications International Corp. (NYSE: SAIC) jumped in morning trading after the company posted third-quarter earnings that significantly outpaced analyst expectations and raised its profit forecast for the fiscal year.
The Reston, Virginia-based technology and engineering firm reported adjusted diluted earnings of $2.58 per share for the quarter, easily surpassing the Wall Street consensus of approximately $2.15. While quarterly revenue of $1.87 billion was largely in line with estimates, the strong profitability underscored the company's operational efficiency and focus on higher-margin contracts.
A key indicator of future growth, the company's book-to-bill ratio, came in at a robust 1.2 for both the quarter and the trailing twelve months. According to the official press release, SAIC secured net bookings of $2.2 billion during the period. A ratio above 1.0 indicates that a company is winning new business faster than it is recognizing revenue, building a strong backlog for future quarters.
Buoyed by the strong results, SAIC management lifted its full-year 2026 guidance. The company now projects adjusted diluted EPS to be in the range of $9.80 to $10.00, an increase from the prior analyst consensus of around $9.55. The revenue forecast for the year was set between $7.275 billion and $7.325 billion.
"Our third quarter results reflect... strong margins due to continued sound program execution," said Jim Reagan, SAIC's Interim Chief Executive Officer. Reagan noted that his priority is to "focus the company for long-term shareholder value creation," signaling a strategic push to enhance growth and profitability.
The positive report provides a significant boost for the company's stock, which has traded near its 52-week low in recent sessions. The performance stands in contrast to the prevailing sentiment among analysts, the majority of whom held a "Hold" rating on the stock heading into the earnings announcement. The average analyst price target of $113.38 already suggested considerable upside from its recent trading levels, a thesis that is now bolstered by the strong operational results and improved outlook.
SAIC operates in the highly competitive government IT services sector, providing engineering, integration, and technology solutions to federal agencies. The strong bookings suggest the company is successfully navigating the complex government procurement landscape and winning key contracts. The CEO's statement noted a 5.6% revenue contraction, adjusted for a government shutdown headwind, which when paired with the significant profit beat, indicates a successful strategic focus on more profitable work over sheer revenue volume.
Investors will now watch to see if the third quarter's momentum can be sustained and whether the strong results will prompt Wall Street to re-evaluate its neutral stance on the company. The combination of a healthy backlog, improving margins, and a confident management outlook suggests SAIC is positioning itself for a period of enhanced shareholder returns.