What Happened?
Shares of government IT services provider Science Applications International Corporation (NASDAQ: SAIC) jumped 16.6% in the afternoon session after the company reported third-quarter results that beat profit estimates and raised its full-year guidance. While revenue for the quarter was in line with Wall Street's expectations at $1.87 billion, it marked a 5.6% decrease year-over-year. However, investors focused on the company's strong profitability. SAIC posted adjusted earnings of $2.58 per share, significantly surpassing analyst estimates by over 20%. Adjusted EBITDA, a measure of core profitability, also came in 5% ahead of consensus at $185 million. Building on this strong performance, SAIC lifted its adjusted earnings per share forecast for the full year to a midpoint of $9.90.
The shares closed the day at $101.47, up 15.9% from previous close.
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What Is The Market Telling Us
SAIC’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for SAIC and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 13% on the news that the company announced weak first quarter 2025 (fiscal 2026) results which missed analysts' EPS estimates. The underwhelming result was due to sluggish revenue growth, which rose just 2% year on year, driven largely by volume increases in existing and new contracts, but weighed down by the completion of older contracts. Looking ahead, the company reaffirmed its full-year guidance for adjusted EPS and EBITDA, but both fell short of Wall Street estimates. Management pointed to strong bookings with a 1.3 book-to-bill ratio and high-profile wins like the U.S. Army contract, but those longer-term prospects likely didn't sway investors focused on profitability. Overall, it was a weak quarter.
SAIC is down 8.5% since the beginning of the year, and at $102.61 per share, it is trading 17.2% below its 52-week high of $123.91 from December 2024. Investors who bought $1,000 worth of SAIC’s shares 5 years ago would now be looking at an investment worth $1,049.
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