Value
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.0 |
| P/S | 9.8 |
| EV/EBITDA | 5.7 |
| Fwd P/E | 9.1 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 11.2x
- ▸PEG: 0.34
- ▸Attractively valued
SAIC · Why this verdict
Why Science Applications Internatio (SAIC) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Science Applications International's perfect four-quarter earnings beat streak with an average 38.6% positive surprise and a PEG of 0.12 make a compelling valuation case, but near-complete revenue concentration in U.S. government contracts creates binary risk from budget negotiations and program cancellations.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Approximately 98% of SAIC's revenue comes from U.S. government customers, with 52% from the Department of Defense alone, creating extreme exposure to federal budget cycles, continuing resolutions, and program priority shifts that are outside management's control. Bear case | No major contract cancellations or funding reductions exceeding 10% of total revenue are announced in the next 12 months. | ↓Deteriorating |
| CounterGovernment IT services contracts are typically multi-year with established funding streams, providing revenue visibility superior to commercial IT services, where clients can cancel at shorter notice. | ||
With a PEG ratio of 0.12 and a forward P/E of 9.9x, SAIC trades at a substantial discount to earnings growth potential, suggesting the market is not fully crediting the earnings acceleration visible in recent quarters. Valuation breakdown | Forward P/E multiple expands toward 13x within 12 months as sustained earnings beats rebuild investor confidence. | →Stable |
| CounterGovernment IT services companies have traded at chronically low multiples for decades because of political risk and budget visibility constraints, making multiple expansion difficult to sustain absent a structural re-rating. | ||
SAIC beat earnings estimates in all four of the last quarters with an average positive surprise of 38.6%, including a 62% beat, demonstrating that conservative management guidance and disciplined contract execution consistently produce results above analyst expectations. Earnings | The earnings beat streak extends to 6 consecutive quarters with average positive surprise remaining above 20%. | ↑Improving |
| CounterGovernment IT contract revenue is subject to program delays, continuing resolutions, and budget sequestration; a single large contract delay can cause significant earnings misses regardless of execution quality. | ||
SAIC generates a return on equity of 28% with strong free cash flow conversion at 72% of net income, indicating the business creates substantial returns on the capital it deploys despite operating in a competitive government contracting environment. Quality breakdown | Return on equity remains above 20% for at least 3 of the next 4 reporting periods, confirming capital efficiency. | ↑Improving |
| CounterHigh ROE in government services often reflects low capital intensity combined with leverage rather than genuine operational superiority, and may be vulnerable if contract profitability compresses under budget pressure. | ||
Approximately 98% of SAIC's revenue comes from U.S. government customers, with 52% from the Department of Defense alone, creating extreme exposure to federal budget cycles, continuing resolutions, and program priority shifts that are outside management's control.
↓DeterioratingBear case
- Expectation
- No major contract cancellations or funding reductions exceeding 10% of total revenue are announced in the next 12 months.
CounterGovernment IT services contracts are typically multi-year with established funding streams, providing revenue visibility superior to commercial IT services, where clients can cancel at shorter notice.
With a PEG ratio of 0.12 and a forward P/E of 9.9x, SAIC trades at a substantial discount to earnings growth potential, suggesting the market is not fully crediting the earnings acceleration visible in recent quarters.
→StableValuation breakdown
- Expectation
- Forward P/E multiple expands toward 13x within 12 months as sustained earnings beats rebuild investor confidence.
CounterGovernment IT services companies have traded at chronically low multiples for decades because of political risk and budget visibility constraints, making multiple expansion difficult to sustain absent a structural re-rating.
SAIC beat earnings estimates in all four of the last quarters with an average positive surprise of 38.6%, including a 62% beat, demonstrating that conservative management guidance and disciplined contract execution consistently produce results above analyst expectations.
↑ImprovingEarnings
- Expectation
- The earnings beat streak extends to 6 consecutive quarters with average positive surprise remaining above 20%.
CounterGovernment IT contract revenue is subject to program delays, continuing resolutions, and budget sequestration; a single large contract delay can cause significant earnings misses regardless of execution quality.
SAIC generates a return on equity of 28% with strong free cash flow conversion at 72% of net income, indicating the business creates substantial returns on the capital it deploys despite operating in a competitive government contracting environment.
↑ImprovingQuality breakdown
- Expectation
- Return on equity remains above 20% for at least 3 of the next 4 reporting periods, confirming capital efficiency.
CounterHigh ROE in government services often reflects low capital intensity combined with leverage rather than genuine operational superiority, and may be vulnerable if contract profitability compresses under budget pressure.
Per-dimension breakdown
Quality
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.6 |
| ROA | 4.8 |
| Gross margin | 0.0 |
| Op margin | 3.2 |
| Net margin | 2.6 |
| Current ratio | 4.6 |
| FCF quality | 9.5 |
| Moat | 5.4 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 26%
- ▸Excellent cash conversion: 135% FCF/NI
- ▸No competitive moat
Growth
6.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.1 |
| EPS growth | 8.7 |
Momentum
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 4.1 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 5.0 |
| Price target | 4.3 |
- ▸LLM news sentiment: +0.56 (n=5)
Insider
4.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.2 |
| notable moves | 3.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.7/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.7 |
| quality rank | 6.0 |
| growth rank | 4.3 |
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.0 |
| support resistance | 7.1 |
| 52w position | 7.8 |
Risk (lower is worse)
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.4 |
| days to cover | 3.8 |
| volatility | 3.0 |
| put call | 10.0 |
| implied vol | 6.5 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 3.2 |
| news risk | 5.0 |
- ▸Above max pain $80
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 9.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 6.8 |
| news activity | 8.0 |
- ▸Estimates up 27.1% (30d)
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (8)
- MOMENTUM:5.7>=5.5
- INSIDER:OK
- NEWS_BOOST:EARNINGS:0.80
- NEWS_BOOST:ANALYST:0.50
- NEWS_BOOST:ANALYST_CLUSTER(4)
- EARNINGS_PROXIMITY:91d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-2.2=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-2.23
Upside
-16.9%
Downside
7.6%
Sizing output
AVOID
SetupRange Bound — RSI 51 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Catalyst at 8.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-2.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -2.23 — supplementary context, not the trigger for this path.
The strongest dimensions are Catalyst at 8.1, Value at 7.6, and Growth at 6.4; the weakest are Insider at 4.1, Peer rank at 4.7, and Quality at 5.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -2.23 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Earnings Beats
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters.
- P2Government Concentration Binary Risk
Trip ifA contract cancellation or funding reduction exceeding 5% of annual revenue is publicly announced.
- P3Attractive Peg Ratio
Trip ifForward P/E multiple compresses below 8x or earnings estimates decline more than 10% from current consensus.
- P4Roe Quality Strength
Trip ifReturn on equity falls below 15% for at least 2 consecutive reporting periods.