Science Applications International Corporation (SAIC): what the price assumes

boothcheck covers Science Applications International Corporation (SAIC) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-28.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/SAIC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.9% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.5%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• At about $101.96 the market pays roughly 12x company-wide operating income, a multiple so low it sits below what even a 5%-a-year operating-profit decline would warrant. The price is not asking for growth, it is barely pricing in continuation.
• Return on equity is about 28.5% against a 9.3% cost of equity, and the company is shrinking its share count roughly 6% a year through buybacks. A high-return business bought back at a low multiple is the value setup the numbers describe.
• The offset is leverage and end-market risk: net debt near $2.4 billion, about 4x operating income, against a contractor whose revenue depends almost entirely on U.S. government budgets and contract recompetes.

Bull Case

The single most decisive number here is the multiple itself: the market pays about 12x company-wide operating income, low enough that the price sits below what even a 5%-a-year operating-profit decline would justify. Flip that one metric, demand a normal services multiple instead of a declining-business multiple, and the entire verdict changes. The price is essentially pricing SAIC as a melting ice cube, yet the business is not melting. Revenue rose 2% to $1.88 billion in the first quarter of fiscal 2026 and again to $1.91 billion in the first quarter of fiscal 2027, with net bookings near $2.1 to $2.4 billion and a book-to-bill above 1.0, meaning the company is winning more work than it burns off (web research). A book-to-bill over 1.0 with a backlog near $22.9 billion is the opposite of decline.

The return profile is what makes the low multiple a genuine value signal rather than a trap. The same high return shows up in the cash: free cash flow capitalized at the cost of equity marks about $89, the earnings-yield method $96, and the two-stage excess-return method $178. Across the asset and earnings-power families the price is supported or cheap, which is why the characterization reads as an asset-and-earnings-power value name rather than a growth bet.

Management is allocating capital exactly as a value investor would want. The share count is shrinking about 6% a year, so per-share earnings rise even on flat revenue, and the buyback is being funded at a 12x multiple, which compounds shareholder value when the underlying return on equity is near 28%. The recent quarter underlined the operating progress: adjusted EBITDA margin improved to 11.6% of revenue from 8.4% a year earlier on better contract mix and lower overhead, and the company raised its fiscal 2027 earnings outlook (web research). A high-return government-services franchise winning new work, expanding margin, and retiring shares at a low multiple is a coherent value case, and the price is paying for almost none of it.

Bear Case

The qualitative reason the market keeps SAIC cheap is concentration in a single, politically governed customer. This is a U.S. government contractor, with defense and intelligence work about 77% of revenue and civilian agencies the rest, so the entire top line rises and falls with federal appropriations and procurement cycles. The FY2025 10-K names the exposure directly, warning that "reduced U.S. government defense spending" and similar pressures could harm the ability to keep "winning new work, and growing our revenues" (accession 0001571123-25-000022). A budget impasse, a continuing resolution, a shift in administration priorities, or a contract protest can each defer revenue the business has nominally booked. The market discounts that political beta with a low multiple, and it is not wrong to: the cash flows are real but the timing is outside the company's control.

Only after the qualitative picture do the numbers reinforce the caution. Growth is barely positive, around 2% organically, so the per-share story leans heavily on buybacks rather than the business compounding. The backlog the bull case cites is itself contingent: the 10-K explains that funded backlog "primarily represents estimated amounts of revenue to be earned in the future from contracts for which funding is appropriated," and that most contracts carry cancellation terms that let the customer end work early (accession 0001571123-25-000022). Backlog is a pipeline, not a guarantee. A book-to-bill that slips below 1.0 in a tighter budget environment would remove the one clear sign the franchise is still growing.

Leverage is the financial pressure point. Net debt is about $2.4 billion, roughly 4x trailing operating income, and interest expense is not even separately reported, so coverage cannot be cleanly computed. That debt is manageable while the government keeps paying on schedule and free cash flow stays near $600 million, but it removes flexibility in a downturn, and it competes with the buyback for the same cash. The price-to-fundamentals gap is real, residual income at $150 against a $102 (June 28, 2026) quote, but the discount exists because the market is paying for a high-return business whose single customer can change the spending environment with a vote, and whose balance sheet leaves limited room if that environment turns.

Valuation

The price is read on a whole-company basis against operating income, and the read is unusual: at roughly 12x operating income the multiple is low enough that the inversion is a bound rather than a solved growth rate. The price sits below what even a 5%-a-year operating-profit decline would warrant, computed at a 7% cost of capital (the model's floor, above the 6.7% CAPM rate). In plain terms, the market is pricing in continued contraction, and the company is not contracting.

The X-ray is lopsidedly supportive. The asset and earnings-power families are more grounded and still favorable: residual income $150, two-stage excess return $178, simple excess return $100, earnings-power value $85, FCF yield $89, earnings yield $96, the Graham number $80. Return on equity near 28.5% drives the excess-return marks above book value of $32.34. The blended mark across the consensus methods is about $151. The fair-value range is pinned at the current price because the inversion floored, which is the model's way of saying the price is at or below the bottom of its plausible band.

The honest summary is that SAIC screens as a high-return, cash-generative government-services business trading at a multiple that assumes decline. The variable that decides whether the discount closes is the federal-budget environment: steady or rising defense and civilian spending lets the buyback and margin gains compound the value, while a budget squeeze validates the market's caution.

Catalysts

The most recent print is the clearest catalyst that the business is improving, not declining. For the quarter ended May 1, 2026, SAIC reported revenue of $1.91 billion, net income of $115 million, diluted EPS of $2.61 and adjusted diluted EPS of $3.23, with adjusted EBITDA margin up to 11.6% of revenue from 8.4% a year earlier on better contract mix, lower SG&A, and a $12 million investment gain, and the company raised its fiscal 2027 earnings outlook (web research). Margin expansion of that size on a government contractor is the swing factor for the per-share story.

Bookings and backlog are the forward indicators. Net bookings were roughly $2.1 billion in the latest quarter for a book-to-bill of about 1.1, on top of about $2.4 billion and a 1.3 ratio a year earlier, with estimated backlog near $22.9 billion (web research). Each quarter's book-to-bill is the readout on whether new awards keep outpacing work delivered, the single signal that separates a growing franchise from a melting one.

The external catalyst that governs everything is the federal budget cycle. Revenue depends on appropriations and procurement timing, so continuing resolutions, defense-spending decisions, and contract recompetes are the events that move the thesis. Watch the quarterly book-to-bill, the trajectory of adjusted EBITDA margin, the pace of the share buyback, and any shift in the defense and civilian budget environment.

Sources: SAIC first quarter fiscal 2027 results (globenewswire.com, finance.yahoo.com, govconwire.com); SAIC first quarter fiscal 2026 results (saic.gcs-web.com, govconwire.com); SAIC Q1 earnings transcript (fool.com).

Peer Cohorts (Per Segment, With Filing Citations)

Defense and Intelligence (reported)

• LDOS (Leidos Holdings, Inc.)
• FY2025 10-K: …across these reportable segments. NATIONAL SECURITY & DIGITAL Our National Security & Digital business provides leading-edge and technologically advanced services, solutions and products across substantially all U.S. federal government customers. Our advanced capabilities allow us to provide technology-enabled…
• FY2025 10-K: …with the remaining attributable to international customers, including the UK Ministry of Defence, the Australian Department of Defence, NATO and customers across a variety of commercial markets. Within the U.S. government, our revenues are diversified across many agencies, including various intelligence agencies, the…
• CACI (CACI International Inc)
• FY2025 10-K: …needs. Our proven Expertise and Technology and strong record of program delivery have enabled us to compete for and secure new customers and contracts, win repeat business, and build and maintain long-term customer relationships. We seek competitive business opportunities and have built our operations to support…
• FY2025 10-K: …We provide Expertise and Technology to government customers. We believe that the total addressable market for our offerings is sufficient to support the Company's plans and is expected to continue to grow over the next several years. Approximately 75% of our revenue comes from defense-related customers, including…
• BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
• FY2025 10-K: "SOFA") to U.S. and non-U.S. government customers. 4 Table of Contents Intelligence Customers We deliver innovative, highly technical capabilities and solutions that directly impact core national security missions across the Intelligence Community and national cyber mission providers. We leverage our knowledge of the…
• FY2025 10-K: …support systems and provide services that include managing and protecting information involved in intelligence, national security, and other sensitive government functions. Our systems also store, process, and transmit sensitive Company and government and commercial customer information, including personally…
• KD (Kyndryl Holdings, Inc.)
• FY2025 10-K: …risks originating from intentional acts of criminal hackers, nation states and hacktivists; from intentional and unintentional acts of customers, business partners, vendors, employees, contractors, competitors and other third parties; and from errors, vulnerabilities and omissions in infrastructure, technology…
• FY2025 10-K: …We are known for our technology integration and modernization expertise - advising, designing, building and managing complex technology environments. Our global, high-quality service delivery is underpinned by experienced and highly-trained practitioners who deliver our capabilities to our customers on a daily basis.…
• PSN (Parsons Corporation)
• FY2025 10-K: 024") and 66% in the year ended December 31, 2023 (‘fiscal 2023"), which includes strong re-compete win rates of 99.6% in fiscal 2025 giving us long-term certainty on key contracts. As of December 31, 2025, our total backlog was $8.7 billion, a decrease of 2% from December 31, 2024. Federal Solutions Our Federal…
• FY2025 10-K: …assets and operations. The below trends are key growth drivers in both our Federal Solutions and Critical Infrastructure segments. Defense Spending Remains a Priority of the U.S. national agenda due to the reemergence of long-term strategic peer competition and the continuance of domestic and international…
• KBR (KBR, Inc.)
• FY2025 10-K: …in artificial intelligence and machine learning, particularly those that provide actors with the capability to use more sophisticated means to attack our systems, may exacerbate cybersecurity and data privacy risks. Any unauthorized electronic or physical intrusion or other security threat may jeopardize the…
• FY2025 10-K: …support solutions to defense, intelligence, space, aviation and other programs and missions to military and other government agencies primarily in the U.S., U.K. and Australia under long-term programs with key technical, scientific or mission-specific differentiation. KBR's full-spectrum, digitally enabled services…

Civilian (reported)

• LDOS (Leidos Holdings, Inc.)
• FY2025 10-K: …laws and regulations that affect us include: u the FAR and supplements, including the DoW Federal Acquisition Regulation Supplement ("DFARS"), which regulate the formation, administration and performance of U.S. government contracts; u the Truthful Cost or Pricing Data Act, which requires certification and disclosure…
• FY2025 10-K: …agency, conducts the procurement. The user agency, or the GSA on its behalf, evaluates the user agency's requirements and initiates a competition limited to GSA Schedule qualified contractors. GSA Schedule contracts are designed to provide the user agency with reduced procurement time and lower procurement costs.…
• CACI (CACI International Inc)
• FY2025 10-K: …granted CACI's motion to transfer the action to the United States District Court for the Eastern District of Virginia. Thereafter, an amended complaint was filed adding three plaintiffs. On September 12, 2008, Mr. Dugan was dismissed from the case without prejudice. On October 2, 2008, CACI filed a motion to dismiss…
• FY2025 10-K: …action. On January 10, 2025, the District Court conducted a hearing on that motion and denied the motion. On January 10, 2025, CACI filed a Notice of Appeal to the U.S. Court of Appeals for the Fourth Circuit. The Court of Appeals established a briefing schedule, which concluded on July 25, 2025. The Court of Appeals…
• BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
• FY2025 10-K: …immigration, energy, transportation, and labor, we work at the core of the mission to modernize systems, boost efficiencies, and save money. Our major civil government customers include the Departments of Veterans Affairs, Health and Human Services, Treasury, Labor, Homeland Security, Justice, Energy, Commerce, and…
• FY2025 10-K: "SOFA") to U.S. and non-U.S. government customers. 4 Table of Contents Intelligence Customers We deliver innovative, highly technical capabilities and solutions that directly impact core national security missions across the Intelligence Community and national cyber mission providers. We leverage our knowledge of the…
• KD (Kyndryl Holdings, Inc.)
• FY2025 10-K: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock and ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ ​ ​ Non- ​ ​ ​ ​ ​ Paid-In Capital ​ Comprehensive ​ Treasury ​ Accumulated ​ Controlling ​ Total ​ ​ Shares ​ Amount ​ Income (Loss) ​ Stock ​ Deficit ​ Interests ​ Equity Equity - March 31, 2022 ​ ​ 224.5 ​ $…
• FY2025 10-K: 023-04-01 2024-03-31 0001867072 us-gaap:TreasuryStockCommonMember 2022-04-01 2023-03-31 0001867072 kd:ShareRepurchaseProgramMember 2024-04-01 2025-03-31 0001867072 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember 2024-04-01 2025-03-31 0001867072 us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember…
• PSN (Parsons Corporation)
• FY2025 10-K: …our compliance with the terms of those contracts and applicable laws and regulations are subject to continuous audit, review and investigation by our customers, including the U.S. federal government. In addition, we are from time to time involved in legal proceedings and investigations arising in the ordinary course…
• FY2025 10-K: …2025-01-31 2025-01-31 0000275880 us-gaap:DomesticCountryMember 2024-01-01 2024-12-31 0000275880 us-gaap:DevelopedTechnologyRightsMember 2025-01-01 2025-12-31 0000275880 us-gaap:RestrictedStockUnitsRSUMember 2024-12-31 0000275880 us-gaap:AdditionalPaidInCapitalMember 2025-01-01 2025-12-31 0000275880…
• ACN (Accenture plc)
• FY2025 10-K: …experienced some of the adverse consequences described above and may in the future experience further adverse consequences, which could materially adversely affect our future results of operations. • If a government client discovers improper or illegal activities in the course of audits or investigations, or alleges…
• FY2025 10-K: …us-gaap:CommonStockMember 2022-08-31 0001467373 acn:CommonClassXMember us-gaap:CommonStockMember 2022-08-31 0001467373 us-gaap:OtherAdditionalCapitalMember 2022-08-31 0001467373 us-gaap:AdditionalPaidInCapitalMember 2022-08-31 0001467373 us-gaap:TreasuryStockCommonMember 2022-08-31 0001467373…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.