SAIC Shares Surge on Big Earnings Beat

Science Applications International Corporation (SAIC) surged 17.9% in early trading after delivering a stronger-than-expected fiscal Q3 2026 report.
Analysts expected $2.15 EPS on $1.87B in revenue, but SAIC delivered:

Adjusted EPS: $2.58 (beat)
Revenue: $1.87B (in line)

The results significantly outperformed earnings expectations, driving immediate investor enthusiasm.

Mixed Financials: Sales Decline but Cash Flow Strengthens

While earnings exceeded expectations, not all metrics were positive:

Sales fell 6%
Operating profit dropped 20%
Operating margin slipped 120 bps
Adjusted net income dipped 1%
GAAP net income fell 21% to $1.69 per share

However, SAIC generated $135M in free cash flow, exceeding both operating income and net income — a key indicator of underlying business strength.

Book-to-Bill Ratio Signals Future Growth

One of the strongest signals for SAIC’s outlook was its 1.2x book-to-bill ratio, implying demand remains healthy and future revenue could accelerate.

Management raised full-year guidance:

FY Sales: ~ $7.3B
Adjusted EPS: $9.80 to $10.00
Full-year FCF: > $550M

Valuation Looks Attractive

SAIC currently carries a market cap of roughly $4.9B. With expected free cash flow of $550M, the stock trades at:

8.9× price-to-FCF
13.3× enterprise-value-to-FCF, including debt

Analysts note SAIC doesn’t need high growth to justify this valuation, making the stock appealing for value and defense-focused investors.