# Science Applications International (SAIC) — Financial Analysis

**Exchange:** NASDAQ  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-29  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/SAIC/thesis · /stocks/SAIC/memo

## Financial Snapshot

---
source: coverage-next-full
ticker: SAIC
step: "04"
title: Financial Snapshot
created: 2026-05-29
---

### Step 04 — Financial Snapshot

#### Three-Year P&L Summary

All figures in millions USD. SAIC's fiscal year ends late January/early February.

| Metric | FY2023 | FY2024 | FY2025E |
|--------|--------|--------|---------|
| Revenue | $7,392 | $7,403 | ~$7,450 |
| YoY Growth | +3.3% | +0.1% | ~+0.6% |
| Gross Profit | ~$960 | ~$975 | ~$985 |
| Gross Margin | ~13.0% | ~13.2% | ~13.2% |
| Operating Income (GAAP) | ~$310 | ~$325 | ~$330 |
| GAAP Operating Margin | ~4.2% | ~4.4% | ~4.4% |
| Adjusted EBITDA | ~$560 | ~$570 | ~$580 |
| Adj. EBITDA Margin | ~7.6% | ~7.7% | ~7.8% |
| Net Income (GAAP) | ~$190 | ~$205 | ~$210 |
| GAAP Net Margin | ~2.6% | ~2.8% | ~2.8% |
| Diluted EPS (GAAP) | ~$3.90 | ~$4.35 | ~$4.60 |
| Adjusted EPS | ~$7.10 | ~$7.50 | ~$7.80 |
| Free Cash Flow | ~$430 | ~$460 | ~$470 |
| FCF Margin | ~5.8% | ~6.2% | ~6.3% |

*Note: FY2025 figures are estimates; precise figures require verification against SAIC's February 2025 10-K filing. Historical figures are based on available SEC filings and earnings reports.*

#### Margin Structure Analysis

##### Why GAAP Margins Appear Low

SAIC's reported GAAP operating margins of ~4-5% can appear thin for a profitable business. The explanation lies in the accounting treatment of cost-plus government contracts and the post-acquisition goodwill/intangibles amortization:

1. **Amortization of intangibles:** Post-Engility acquisition (2019), SAIC carries significant intangible amortization (~$80-100M/year) flowing through operating income. Adjusting for this, margins are meaningfully higher.

2. **High pass-through costs:** Cost-plus contracts include subcontractor costs, materials, and ODCs (other direct costs) that SAIC bills to the government at cost with minimal markup. These inflate revenue and compress margins arithmetically — not a profitability concern.

3. **Low capital intensity baseline:** There is minimal depreciation/amortization of physical assets because SAIC doesn't own much. The margin "compression" is acquisition-driven, not operational.

**Adjusted Operating Margin (removing amortization of acquired intangibles):** ~7-9% — much more representative of economic profitability.

##### Free Cash Flow — The Real Metric

FCF is SAIC's most important financial metric:
- **CapEx is minimal:** ~$30-50M/year (0.4-0.6% of revenue), reflecting the asset-light model
- **Working capital is favorable:** Government pays within 30 days of invoice; SAIC often collects faster than it pays subcontractors
- **D&A primarily acquisition-driven:** Adds back to net income without cash cost
- **FCF conversion:** Typically 100-130% of GAAP net income; FCF is often double adjusted EBITDA to FCF conversion

This means SAIC's FCF yield (FCF/Market Cap) is substantially higher than the P/E ratio would suggest.

#### Income Statement Deep Dive

##### Revenue Quality
- 100% US government — zero commercial exposure
- ~55% cost-plus (fee is ~5-10% of costs; extremely stable)
- Organic growth historically 2-5%; FY2024 was essentially flat (budget uncertainty, CR environment)

##### Cost Structure
Labor is the dominant cost (~60-65% of revenue before fringe). Subcontractor costs are ~20-25% pass-through. Corporate overhead ~8-10%. This highly variable cost structure (labor deployed on specific contracts) provides natural cost flexibility if revenue contracts — though severance and clearance maintenance costs create some stickiness.

##### Non-GAAP Adjustments
SAIC uses adjusted EBITDA that adds back:
- Amortization of acquired intangibles
- Stock-based compensation
- Acquisition/integration costs
- Legal settlements (periodic)

The adjustments are largely non-cash and acquisition-driven — reasonable to add back for operational assessment, though accumulated goodwill from acquisitions is a real economic cost if those businesses underperform.

#### Earnings Per Share Bridge

The large gap between GAAP EPS (~$4) and Adjusted EPS (~$7-8) is driven by:
1. Amortization of intangibles (~$1.50-2.00/share after-tax impact)
2. Stock-based compensation (~$0.80-1.00/share)
3. Tax adjustments (minor)

Importantly, **adjusted EPS has grown steadily** even as revenue has been flat — driven by buybacks reducing the share count ~3-4% annually. SAIC's EPS growth story is primarily a financial engineering story (buybacks) layered on top of stable operational performance, not revenue growth.

#### Profitability vs. Peers

| Company | GAAP Op Margin | Adj. EBITDA Margin | FCF Margin |
|---------|---------------|-------------------|-----------|
| SAIC | ~4-5% | ~7-8% | ~6-7% |
| Leidos (LDOS) | ~6-8% | ~10-12% | ~8-9% |
| Booz Allen (BAH) | ~9-11% | ~11-13% | ~8-10% |
| CACI | ~8-10% | ~11-13% | ~9-11% |

SAIC trades at a margin discount to peers. This is partly structural (more cost-plus work, heavier subcontractor pass-through) and partly a historical artifact of NMCI's thin-margin enterprise IT infrastructure operations. Management's modernization strategy aims to shift mix toward higher-margin digital/advisory work over time.

#### Key Financial Ratios (Approximate)

| Metric | Value |
|--------|-------|
| P/E (GAAP) | ~15-18x |
| P/E (Adjusted) | ~10-13x |
| EV/EBITDA | ~10-13x |
| EV/Revenue | ~0.7-0.9x |
| FCF Yield | ~7-9% |
| Dividend Yield | ~1.5-2.0% |
| Net Debt/EBITDA | ~3.5-4.0x |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/SAIC/fundamental

## Navigation

- Overview: /stocks/SAIC
- Financials (this page): /stocks/SAIC/financials
- Thesis: /stocks/SAIC/thesis
- Investment Memo: /stocks/SAIC/memo
- Coverage universe: /stocks