7) Science Applications International Corporation (NASDAQ:SAIC)
Forward P/E as of November 20: ~13.4x
Number of Hedge Fund Holders: 25
Science Applications International Corporation (NASDAQ:SAIC) offers technical, engineering, and enterprise information technology (IT) services mainly in the US. The company also provides digital engineering, cybersecurity, and cloud computing, among other solutions.
Xage Security and Science Applications International Corporation (NASDAQ:SAIC) announced a strategic relationship to bring zero-trust security solutions to critical infrastructure and distributed edge, which includes operational technology, IT, and cloud environments.
In a bid to address the increasing demand from the Federal sector to secure distributed edge and cyber-physical environments, Xage Security Gov continues to work with Science Applications International Corporation (NASDAQ:SAIC) to address these needs. This collaboration is expected to accelerate Zero Trust adoption across the public sector.
Furthermore, during Q2 2025, Science Applications International Corporation (NASDAQ:SAIC) was awarded a 5-year (one-year base, plus four, one-year option periods), $206 million recompete to deliver high-quality IT services which are critical to the seamless execution of the Veterans Affairs Financial Services Center’s operations. As per the industry veterans, this effort is expected to support the Financial Services Center in Austin, TX with essential services like infrastructure and application support, cloud services, cybersecurity, and data analytics, among other services.
These developments further strengthen the Science Applications International Corporation (NASDAQ:SAIC)’s position as a leader in addressing the cybersecurity challenges witnessed by government entities and critical infrastructure providers. Heartland Advisors, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“We see a similar opportunity in Science Applications International Corporation (NASDAQ:SAIC), which offers a range of IT services to its customers.
SAIC has faced recent challenges with lower-than-average government contract renewals and lower demand for their IT services, prompting the appointment of new management to address business development concerns. We purchased shares of SAIC in the second quarter on the premise that the new management team, led by a CEO previously with Microsoft, will be able to succeed in two key self-help efforts: increasing the volume of SAIC bids and improving the firm’s below-average industry “recompete rates,” which consist of rebidding on previously awarded expiring government contracts that are typically 5 years in length.
These efforts, coupled with internally focused capital allocation strategies that include dividend growth and active share buybacks, are likely to drive price appreciation for the stock. In the meantime, SAIC shares trade at a modest 13 times forecast earnings with a strong 8% free cash flow/enterprise value yield. Additionally, SAIC’s newly appointed CEO and CFO purchased shares during the quarter — suggesting to us the management team is confident in future prospects at SAIC.”
