Why Science Applications International Corp (NYSE: SAIC) Stock is Crashing

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Science Applications International Corp (NYSE: SAIC) stock fell over 16.6% on 26th March, 2021 (as of 10:32:53 UTC-4 · USD; Source: Google finance) as the company posted mixed results for the fourth quarter of FY 21 and gave weak topline outlook for full year.

Contract award activity in the fourth quarter had translated to a book-to-bill of 0.4 for the fourth quarter and 1.7 for the full year. Fourth quarter net bookings were driven by two large contract awards, The US Corps of Engineers RITS and the AMCOM Hardware-in-the-Loop Aviation Services contract, this latter being the second in the series of four task order awards in the AMCOM recompete portfolio. At the end of the fourth quarter, net of a backlog adjustment in the fourth quarter, SAIC’s total contract backlog stood at approximately $21.5 billion with funded contract backlog of $3 billion. The estimated value of SAIC’s submitted proposals awaiting award at the end of the fourth quarter was approximately $21.5 billion with about two-thirds relating to new business opportunities. SAIC has generated a record $524 million of free cash flow for the year and exceeded the December guidance of $515 million for the year. Days sales outstanding at the end of the fourth quarter was strong at 59 days.

SAIC in the fourth quarter of FY 21 has reported the adjusted earnings per share of $1.67, beating the analysts’ estimates for the adjusted earnings per share of $1.45, according to analysts polled by Thomson Reuters. The company had reported the adjusted revenue growth of 1 percent to $1.72 billion in the fourth quarter of FY 21, missing the analysts’ estimates for revenue of $1.78 billion. The revenue growth was driven by new business mainly supporting civilian customers in the Air Force, partially offset by impacts from COVID-19. The company posted fourth quarter adjusted EBITDA of $159 million, which represents a $25 million increase from the prior year. Adjusted EBITDA margin equated to 9.3% after adjusting for $7 million of acquisition and integration costs.

Additionally, the company has declared a quarterly dividend of $0.37 a share payable on April 30th to shareholders of record on April 16th.

For full year 2022, the company expects revenues to be in the range of $7.1 billion to $7.3 billion and adjusted earnings are expected to be in the range of $6.00 to $6.25 per share. The analysts currently estimate earnings to be of $7.20 per share on revenues to be of $7.62 billion.

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