Can Science Applications International (SAIC) Justify Its Valuation After New Defense Contract Wins?

Science Applications International (SAIC) recently announced a $400 million recompete contract with a U.S. Intelligence Agency, along with a $70 million U.S. Navy radar task order. These deals underscore fresh contract momentum in government and defense work.

See our latest analysis for Science Applications International.

These fresh contract wins come as Science Applications International shares trade at US$126.54, with a 90-day share price return of 36.58% and a 5-year total shareholder return of 62.44%, which points to strengthening momentum over both shorter and longer periods.

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After a 36.58% gain over 90 days and fresh contract momentum, Science Applications International now sits at a very different entry point. Does the current valuation still provide enough potential reward to justify the risk for new buyers?

Most Popular Narrative: 7.4% Overvalued

The most followed narrative places Science Applications International’s fair value at $117.80, which sits below the current $126.54 share price and frames the recent rally against tighter analyst expectations.

The analysts have a consensus price target of $117.8 for Science Applications International based on their expectations of its future earnings growth, profit margins and other risk factors.

However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $137.0, and the most bearish reporting a price target of just $85.0.

Read the complete narrative.

Want to understand why a company with recent earnings beats still carries a lower fair value than its share price? The narrative leans on modest growth, firmer margins, and a higher future earnings multiple to reconcile that gap. The full set of revenue, profit and valuation assumptions sits under the hood.

Result: Fair Value of $117.80 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still clear pressure points for Science Applications International, including potential margin compression in key segments and tougher competition on major government IT contracts.

Find out about the key risks to this Science Applications International narrative.

Another View: Science Applications International Through Earnings Multiples

The analyst narrative tags Science Applications International as 7.4% overvalued at $117.80 fair value, yet Simply Wall St’s model points to something very different. On a P/E of 13.2x, SAIC screens as good value versus a 16.5x fair ratio, 22.8x industry, and 22x peers. Does that gap signal mispricing or just higher risk being priced in?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With Science Applications International attracting both concern and optimism, it makes sense to move quickly and review the numbers firsthand. To balance the positives against the downsides in one place, start by weighing the 3 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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