SAIC Beats Earnings Expectations, Easing Fears of Government Spending Cuts

Science Applications International Corporation (SAIC) reported strong fourth-quarter earnings, topping expectations and easing concerns about potential government spending cuts. The government contractor delivered adjusted earnings per share (EPS) of $2.57, well above analyst estimates of $2.09, while revenue reached $1.84 billion, surpassing the $1.82 billion consensus forecast. The company also raised its full-year fiscal 2026 guidance, a move that has propelled its stock up 10% in early trade as it approaches key technical resistance at its 200-day moving average near $122.

The earnings beat was driven by solid revenue growth of 5.8% year-over-year, primarily due to increased volume on new and existing contracts. Adjusted operating income came in at $176 million, outpacing expectations of $141.5 million, while adjusted EBITDA was $177 million, ahead of the $164.3 million estimate. Free cash flow for the quarter stood at a robust $236 million, reinforcing the company’s financial strength.

Concerns about reduced government spending had weighed on SAIC and its peers, but the company’s strong results and upbeat outlook suggest that demand for its services remains resilient. CEO Toni Townes-Whitley highlighted a recent $1.8 billion contract win for the System Software Lifecycle Engineering program as a key milestone, adding that SAIC has a backlog of bids worth approximately $20 billion, signaling continued momentum.

For fiscal 2026, SAIC now expects revenue between $7.60 billion and $7.75 billion, slightly raising the lower end of its prior range of $7.55 billion to $7.75 billion. Adjusted EBITDA is projected at $715 million to $735 million, up from the previous target of around $720 million. Additionally, the company raised its adjusted EPS outlook to $9.10-$9.30, ahead of prior guidance of $8.90-$9.10, and above Wall Street’s $9.08 estimate.

Despite these strong results, SAIC’s stock faces near-term technical resistance at its 200-day moving average of $122. If the stock can break through this level, it may signal further bullish momentum. Given its strong earnings performance and upward revision to guidance, investor sentiment appears to be improving. However, concerns about broader government budget constraints could continue to weigh on the sector.

Looking ahead, SAIC’s ability to maintain growth in a potentially tightening fiscal environment will be key. While government contract spending remains under scrutiny, SAIC’s pipeline of projects and its ability to secure large-scale contracts provide optimism. Investors will be watching closely to see whether the company can sustain its momentum and navigate any potential headwinds in the broader government contracting space.