Why Science Applications International Corp (NYSE: SAIC) stock is falling

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Science Applications International Corp (NYSE: SAIC) stock lost over 2.6% on March 27th, 2020 (as of 11:43 am GMT-4 ; Source: Google finance) after the company reported the  earnings for the fourth quarter that ended January 31, 2020 to $59 million, compared to a loss of $9 million the year earlier. Contract award activity in the fourth quarter had led to net bookings of $2.4 billion, translating to a book-to-bill of 1.5 times for the fourth quarter. Fourth quarter net bookings had comprised of a wide variety of contract awards and modifications, that also included $1.1 billion of Space and National Security awards, including the new business win of US Air Force, Common Computing Environment or Cloud One contract valued at $727 million. The company was successful at retaining a classified space contract of value at approximately $265 million due to the company’s leadership in the space domain and the emphasis in this market. Subsequent to the end of the fourth quarter, SAIC had resecured two notable new business contracts that have been in protest resolution. At the end of the fourth quarter, SAIC’s total contract backlogs stood at about $15 billion with funded contract backlog of $3 billion.

SAIC in the fourth quarter of FY 20 has reported the adjusted earnings per share of $1.58, beating the analysts’ estimates for the adjusted earnings per share of $1.34, according to Analysts polled by FactSet. The company had reported the adjusted revenue growth of 29 percent to $1.54 billion in the fourth quarter of FY 20, missing the analysts’ estimates for revenue of $1.57 billion. Fourth quarter adjusted EBITDA increased by a $39 million to $134 million, from the prior year. Adjusted EBITDA margin stood at 8.7% after adjusting for $18 million of acquisition and integration costs, which was mostly related to the Engility integration. The company has ended the year with cash on hand of $188 million.

Additionally, the company has declared a quarterly dividend of $0.37 a share payable on April 24 to the shareholders of record on April 9.

Meanwhile, the company has closed the acquisition of Unisys Federal on March 13th. The company will enhance the capabilities and government priority areas including IT modernization, cloud migration, managed services and DevSecOpps. An expanded portfolio of intellectual property and technology will boost the offerings enabling government tailored commercial-based solutions. The acquisition will increase the access to current and new customers with a strong pipeline of new business opportunities. This acquisition is expected to be highly accretive across key financial metrics. The company has integrated the Engility and intends to successfully integrate Unisys Federal.

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