Science Applications International Corporation
SAIC
$133.05
-1.20%
Science Applications International Corporation (SAIC) is a technology integrator providing technical, engineering, and enterprise IT services primarily to the U.S. government, organized into two reportable segments: Defense and Intelligence, which serves the Department of War and the Intelligence Community, and Civilian, which serves federal, state, and local agencies. With roughly 23,000 employees and a market capitalization near $5.3 billion, SAIC occupies a mid-tier position among government services contractors — smaller than Leidos or Booz Allen but a scaled, mission-critical partner for national security and civilian IT modernization programs. The current investor narrative centers on a sharp post-earnings re-rating: the company topped Q2 earnings and revenue estimates and raised full-year guidance, with management commentary pointing to robust demand for defense technology solutions, even as headline revenue declined modestly year over year. Debate among investors hinges on whether the stock's roughly 37% one-year rally has already captured the earnings beat and guidance raise, or whether a still-discounted valuation relative to peers leaves room for further multiple expansion as backlog converts.…
SAIC
Science Applications International Corporation
$133.05
Related headlines
Investment Opinion: Should I buy SAIC Today?
The synthesized recommendation is Hold. SAIC presents a balanced risk/reward profile: the analyst consensus is 'hold' with a mean of 2.82 and an average target price of $132.70, slightly below the current price of $134.66, implying limited upside. The core thesis is that the company's deep value multiple (forward PE of 11.73x) and strong free cash flow ($609 million TTM) are offset by revenue contraction (-4.79% YoY) and a stock that has already rallied 36.64% over the past year.\n\nSupporting evidence for a Hold includes: 1) the forward PE of 11.73x is well below the Technology sector average, but the PS ratio of 0.65x and EV/Sales of 1.08x reflect the market's skepticism about growth; 2) revenue declined 4.79% year over year, though gross margin improved from 11.13% to 12.63%; 3) free cash flow is robust at $609 million TTM, with a low payout ratio of 19.55% and a 1.49% dividend yield; and 4) the implied downside to the analyst average target is -1.5%, while the high target of $154 offers 14.4% upside. The stock's beta of 0.309 and max drawdown of -28.08% underscore its defensive characteristics.\n\nThe biggest risks that could invalidate the thesis are: 1) a continued decline in defense spending, which would pressure the Defense and Intelligence segment that generates $1.439 billion of revenue; 2) margin compression if contract mix deteriorates, given net margin of just 4.93%; and 3) valuation compression if the market continues to doubt earnings sustainability. The rating would upgrade to Buy if revenue growth turns positive or if the forward PE compresses below 10x with stable margins, and downgrade to Sell if revenue declines accelerate beyond 5% or if free cash flow falls below $500 million. Relative to its history, the stock is fairly valued: the trailing PE of 13.16x is in the middle-to-lower portion of its multi-year range, while the PS ratio of 0.65x is near the bottom of its historical band.
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SAIC 12-Month Price Forecast
SAIC presents a neutral risk/reward profile at the current price of $134.66. The stock's deep value multiple (forward PE of 11.73x) and strong free cash flow ($609 million TTM) are attractive, but revenue is contracting at -4.79% year over year and the analyst consensus is 'hold' with an average target below the current price. The recent 36.64% one-year rally has likely priced in the earnings beat and guidance raise, leaving limited upside to the average target. The key tension is whether margin expansion and buybacks can offset revenue declines; if revenue growth returns, the stock could re-rate higher, but if declines accelerate, the low multiple may persist. I would upgrade to bullish if revenue growth turns positive or if the stock pulls back to the $120–$125 range, and downgrade to bearish if revenue declines exceed 5% or if free cash flow falls below $500 million.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Science Applications International Corporation's 12-month outlook, with a consensus price target around $132.30 and implied upside of -0.6% versus the current price.
Average Target
$132.30
0 analysts
Implied Upside
-0.6%
vs. current price
Analyst Count
—
covering this stock
Price Range
$99 - $154
Analyst target range
Coverage is moderate with 10 analysts, and sentiment is decidedly neutral: the consensus recommendation is "hold" with a recommendation mean of 2.82 (where 3.0 is a hold), and the average target price of $132.70 sits slightly below the current price of $134.66 — implying roughly -1.5% downside to consensus. The distribution skews cautious, with Goldman Sachs maintaining a Sell rating (most recently affirmed 2026-02-12), JP Morgan downgrading from Overweight to Neutral in September 2025, and UBS and Truist sitting at Neutral/Hold, while Stifel and Citigroup remain Buy-rated. The consensus therefore leans neutral-to-bearish on valuation grounds, suggesting the recent rally has run past where most analysts see fair value.
The target range is wide — from a low of $103.00 to a high of $154.00 — a spread of roughly 50% that signals high uncertainty about the company's trajectory. The high target of $154 implies multiple expansion toward 13–14x forward earnings plus successful conversion of the raised guidance into sustained growth, while the low target of $103 prices in margin compression, budget pressure, or a reversion to the pre-rally trading range. Notably, institutional ratings show no recent upgrades — the most recent actions (March 2026) were reiterations of existing Hold and Buy ratings, and the only directional change in the past year was JP Morgan's downgrade to Neutral — indicating analysts are waiting for more evidence before turning constructive. With the stock trading above the average target and the consensus at hold, the setup favors caution: the market has already priced in the earnings beat, and further upside likely requires either a new guidance raise or a broader re-rating of government services names.
Bulls vs Bears: SAIC Investment Factors
The bear case currently has stronger evidence: revenue is contracting at -4.79% year over year, the analyst consensus is 'hold' with an average target below the current price, and the stock has already rallied 36.64% over the past year, leaving it near its 52-week high. The bull case rests on deep value (forward PE of 11.73x), robust free cash flow ($609 million TTM), and improving margins (gross margin up from 11.13% to 12.63%), but these positives are largely priced in after the recent rally. The single most important tension is whether SAIC can return to revenue growth or whether margin expansion and buybacks alone can sustain earnings growth; if revenue continues to decline, the low multiple may prove justified rather than a value opportunity. A resolution in either direction — a return to growth or a further revenue deceleration — would significantly change the investment thesis.
Bullish
- Deep value multiple vs. sector: SAIC trades at a trailing PE of 13.16x and a forward PE of 11.73x, versus a Technology sector that routinely trades above 25x earnings. Its PS ratio of 0.65x and EV/Sales of 1.08x are far below typical IT services multiples, leaving substantial room for multiple expansion if earnings growth persists.
- Strong free cash flow and capital returns: Trailing-twelve-month free cash flow is $609 million, and the latest quarter alone generated $250 million of FCF on $258 million of operating cash flow. Management repurchased $98 million of stock and paid $17 million in dividends in the quarter, with a low payout ratio of 19.55% and a 1.49% dividend yield.
- Improving margins despite revenue decline: Gross margin expanded from 11.13% in Q1 2025 to 12.63% in the latest quarter, while operating margin reached 7.37% and EBITDA margin 9.66%. This margin discipline, combined with a 4.79% revenue decline, shows the company is protecting profitability through better contract mix and cost control.
- Defensive low-beta profile: With a beta of just 0.309, SAIC moves roughly 69% less than the broader market, and its max drawdown of -28.08% is modest for an equity. This makes it attractive for risk-averse investors seeking exposure to government IT spending without high market correlation.
Bearish
- Revenue contraction and sequential softness: Revenue declined 4.79% year over year to $1.75 billion in the latest quarter, down from $1.877 billion in Q1 2025. The multi-quarter trend shows sequential softness, with the Defense and Intelligence segment generating $1.439 billion versus just $288 million from Civilian, concentrating risk in a single segment.
- Analyst consensus neutral with downside: The consensus recommendation is 'hold' with a mean of 2.82, and the average target price of $132.70 sits below the current price of $134.66, implying -1.5% downside. Goldman Sachs maintains a Sell rating, and JP Morgan downgraded to Neutral in September 2025, indicating limited analyst support for further upside.
- Elevated leverage and thin margins: Debt-to-equity of 1.804 and a debt ratio of 0.505 reflect meaningful leverage, with interest coverage of only 3.79x. Net margin is just 4.93% and gross margin 12.10%, leaving little cushion if contract pricing or costs deteriorate.
- Stock near 52-week high, vulnerable to profit-taking: The stock trades at approximately 87% of its 52-week range, with a 52-week high of $142.66 just $8 above the current price. The 1-month gain of 6.70% is smaller than the 3-month gain of 19.57%, suggesting decelerating momentum that could reverse near resistance.
SAIC Technical Analysis
SAIC is in a sustained uptrend, with the current price of $134.66 up 36.64% over the past year and 33.04% year-to-date, dramatically outpacing the S&P 500's 16.0% and 14.17% respective gains. The stock is trading at approximately 87% of its 52-week range (52-week low of $81.08, 52-week high of $142.66), positioning it in the upper quartile of its annual band — a sign of persistent momentum rather than deep value, though the roughly $8 gap to the high means it has not yet fully reclaimed its peak. This positioning suggests buyers remain in control, but the stock is no longer cheap on a price basis and is vulnerable to profit-taking near prior highs.
Short-term momentum is strongly positive and accelerating: the stock gained 6.70% over the past month and 19.57% over three months, with the most recent session alone up 3.82% ($129.71 to $134.66) on volume of 656,222 shares. Relative strength versus SPY is positive across every window — +4.58% over one month, +16.44% over three months, and +20.64% over one year — confirming SAIC is a market leader, not merely riding beta. The 1-month gain (+6.70%) is smaller than the 3-month gain (+19.57%), implying some deceleration in the pace of advance, but the sharp single-day breakout to a near-52-week-high close suggests the trend re-accelerated rather than reversed.
Key technical levels are well defined: support sits at the 52-week low of $81.08, with intermediate support likely near the $120–$122 area where the stock consolidated in early October, while resistance is the 52-week high of $142.66. A breakout above $142.66 would confirm a new leg higher and likely invite momentum buyers, whereas a breakdown below $120 would signal the post-earnings rally is fading and could open a retest of the $100–$105 zone. Volatility is remarkably low for an equity: beta of just 0.309 means SAIC moves roughly 69% less than the market, and a max drawdown of -28.08% over the period underscores its defensive, low-beta profile — attractive for risk-averse positioning but implying limited upside torque if the broader market rallies hard.
Beta
0.31
0.31x market volatility
Max Drawdown
-28.1%
Largest decline past year
52-Week Range
$81-$143
Price range past year
Annual Return
+37.8%
Cumulative gain past year
| Period | SAIC Return | S&P 500 |
|---|---|---|
| 1m | +2.4% | +1.8% |
| 3m | +16.8% | +3.5% |
| 6m | +38.3% | +11.2% |
| 1y | +37.8% | +19.1% |
| ytd | +31.4% | +14.1% |
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SAIC Fundamental Analysis
Revenue is contracting modestly rather than growing: the most recent quarter (ending 2026-01-30) posted revenue of $1.75 billion, down 4.79% year over year, following $1.866 billion in Q3 2025 and $1.769 billion in Q2 2025. The multi-quarter trend shows sequential softness — revenue fell from $1.877 billion in Q1 2025 to $1.75 billion in the latest quarter — with the Defense and Intelligence segment generating $1.439 billion versus just $288 million from Civilian, meaning the company's fortunes are overwhelmingly tied to defense and intelligence spending. The investment case therefore rests less on top-line growth and more on the company's ability to offset revenue headwinds through margin discipline and share repurchases, which have reduced shares outstanding from 51.6 million to roughly 45 million over the past two years.
Profitability is solid and improving on a per-share basis: the latest quarter delivered net income of $85 million on $1.75 billion of revenue (net margin of 4.86%), with gross margin of 12.63% and gross profit of $221 million. Gross margin has expanded from 11.13% in Q1 2025 to 12.63% in the latest quarter, and operating margin stands at 7.37% (operating income of $129 million), while EBITDA of $169 million equates to a 9.66% EBITDA margin. These are typical, thin margins for the government IT services industry, where cost-plus and fixed-price contracts cap upside, but the steady expansion from the low-11% range toward 12.6% signals improving contract mix and cost discipline that supports the earnings beat narrative.
Balance sheet and cash flow metrics are healthy but levered: debt-to-equity of 1.804 and a debt ratio of 0.505 reflect meaningful leverage typical of a company that has funded buybacks and acquisitions with debt, though interest coverage of 3.79x and a current ratio of 1.20 provide adequate cushion. Free cash flow is robust at $609 million on a trailing-twelve-month basis, with the latest quarter generating $250 million of FCF on $258 million of operating cash flow, and ROE of 23.87% and ROA of 7.01% demonstrate efficient capital deployment. The company returns cash aggressively — $98 million of stock repurchased and $17 million of dividends paid in the latest quarter — while maintaining a modest dividend yield of 1.49% and a low payout ratio of 19.55%, indicating the dividend is well covered and buybacks remain the primary capital return lever.
Quarterly Revenue
$1.8B
2026-01
Revenue YoY Growth
-4.8%
YoY Comparison
Gross Margin
12.6%
Latest Quarter
Free Cash Flow
$609000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is SAIC Overvalued?
Because SAIC is profitable — trailing net income is positive with EPS of $0.076 on a per-share basis and quarterly net income of $85 million — the PE ratio is the appropriate primary metric. The stock trades at a trailing PE of 13.16x versus a forward PE of 11.73x, and the gap implies the market expects earnings growth of roughly 12% over the next year, consistent with analyst estimated EPS of $13.07 versus the current run-rate. A forward PE below 12x is unusually low for a technology-sector name, suggesting the market is pricing in skepticism about growth durability despite the recent earnings beat.
Relative to the broader Technology sector, SAIC screens as a deep value outlier: its PS ratio of 0.65x and EV/Sales of 1.08x are far below typical software and IT services multiples, while its EV/EBITDA of 10.95x and PB of 3.14x are moderate. The PEG ratio of 1.90 and price-to-free-cash-flow of 7.74x (on the pcf_ratio metric) further underscore that cash generation is cheap relative to the market cap of roughly $4.7–$5.3 billion. The discount is partly justified — government services contractors grow slowly, carry thin margins (net margin 4.93%, gross margin 12.10%), and face budget-cycle risk — but a forward PE near 11.7x versus a sector that routinely trades above 25x represents a substantial valuation gap that could narrow if guidance raises continue.
Historically, SAIC's own valuation band shows the stock is not expensive relative to its past: trailing PE has ranged from roughly 6.6x (Q2 2023) to over 43x (Q4 2024), with recent quarters clustering between 10.2x and 14.0x, and PS ratio has compressed from above 3.6x in 2024 to 0.65x today. The current PE of 13.16x sits in the middle-to-lower portion of its multi-year range, while the PS ratio is near the bottom of its historical band — a striking divergence that reflects both margin expansion and the market's reluctance to award a higher multiple. This suggests either a value opportunity if earnings growth persists, or a warning that the market doubts the sustainability of recent profitability gains.
PE
13.2x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 7x~22x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
10.9x
Enterprise Value Multiple
Investment Risk Disclosure
SAIC faces financial and operational risks rooted in its thin margins and concentrated revenue base. Net margin is just 4.93% and gross margin 12.10%, leaving minimal cushion against cost overruns or contract renegotiations. Revenue declined 4.79% year over year to $1.75 billion, and the Defense and Intelligence segment accounts for $1.439 billion of that, versus only $288 million from Civilian, meaning any slowdown in defense spending would disproportionately impact results. Additionally, debt-to-equity of 1.804 and interest coverage of 3.79x indicate that leverage could become a constraint if earnings decline further.\n\nMarket and competitive risks include valuation compression and sector rotation. SAIC trades at a forward PE of 11.73x, which is low relative to the Technology sector, but the discount may persist if revenue growth remains negative. The stock's beta of 0.309 means it is less sensitive to market swings, but it also limits upside torque in a broad rally. Recent news highlights leadership changes and product launches driving divergent moves in cybersecurity and defense, suggesting competitive dynamics are shifting. Analyst sentiment is cautious, with Goldman Sachs maintaining a Sell rating and JP Morgan downgrading to Neutral, indicating that further multiple expansion may require a new catalyst.\n\nThe worst-case scenario would involve a combination of defense budget cuts, margin compression, and a failure to convert backlog into revenue. In this scenario, the stock could retest its 52-week low of $81.08, representing a decline of approximately 39.8% from the current price of $134.66. The analyst low target of $103.00 implies a more moderate downside of about 23.5%. A realistic adverse scenario might see the stock fall to the $100–$105 range, a loss of 22–26%, if revenue declines accelerate and the market re-rates government services names lower.
FAQ
The key risks include: 1) Revenue concentration and defense budget risk — the Defense and Intelligence segment generates $1.439 billion of revenue, and any slowdown in defense spending would disproportionately impact results; 2) Margin pressure — net margin is just 4.93% and gross margin 12.10%, leaving little cushion for cost overruns; 3) Elevated leverage — debt-to-equity of 1.804 and interest coverage of 3.79x could constrain financial flexibility if earnings decline; and 4) Valuation compression — the stock trades near its 52-week high of $142.66, and the analyst consensus is 'hold' with an average target below the current price, suggesting limited upside. The most severe risk is a combination of defense budget cuts and margin compression, which could drive the stock toward the 52-week low of $81.08, a 39.8% decline.
The 12-month forecast includes three scenarios: a bull case with 25% probability targeting $150–$160, a base case with 50% probability targeting $125–$140, and a bear case with 25% probability targeting $100–$110. The base case is most likely, assuming revenue declines moderate to -2% to -3% YoY, gross margin holds around 12.5%, and free cash flow remains above $550 million. The bull case requires successful backlog conversion and multiple expansion toward 13–14x forward earnings, while the bear case assumes accelerated revenue declines and further multiple compression. The analyst average target of $132.70 aligns with the base case, and the high target of $154 aligns with the bull case.
SAIC appears undervalued relative to the broader Technology sector, but fairly valued relative to its own history and growth prospects. Its trailing PE of 13.16x and forward PE of 11.73x are far below the sector average of over 25x, and its PS ratio of 0.65x is near the bottom of its historical band. However, the discount is partly justified by revenue contraction (-4.79% YoY), thin net margins (4.93%), and slow growth. The market is pricing in skepticism about earnings durability, as evidenced by the PEG ratio of 1.90 and the analyst consensus 'hold' with an average target below the current price. If the company can return to revenue growth, the multiple could expand, but if declines persist, the stock may remain cheap.
SAIC is a reasonable buy for value-oriented, risk-averse investors, but it is not a compelling growth story. The stock trades at a forward PE of 11.73x, well below the Technology sector, and offers a 1.49% dividend yield with strong free cash flow of $609 million TTM. However, revenue declined 4.79% year over year, and the analyst consensus is 'hold' with an average target of $132.70, slightly below the current price of $134.66. The biggest downside risk is a retest of the 52-week low of $81.08, which would represent a 39.8% decline. For investors seeking defensive exposure with limited downside, SAIC could be a good buy on pullbacks to the $120–$125 range, but at current levels, the risk/reward is balanced.
SAIC is better suited for long-term investment, with a suggested minimum holding period of 2–3 years. The company is in a mature stage with slow growth, but it offers a stable dividend (1.49% yield), consistent free cash flow, and a low beta (0.309) that reduces portfolio volatility. Short-term trading is less attractive because the stock has already rallied 36.64% over the past year and trades near its 52-week high, leaving limited near-term upside. Earnings visibility is moderate, with a backlog-driven business model, but revenue declines introduce uncertainty. Long-term investors can benefit from the discounted valuation and capital returns, but they should monitor revenue trends and defense budget developments.