Science Applications Hits 52-Week High on Q3 Results - Analyst Blog

Shares of Science Applications International Corporation (SAIC) hit a 52-week high of $52.95 on Dec 11, 2014. However, the stock closed the session at $52.13, which reflects a solid year-to-date return of 64.1%.

Despite its strong price appreciation, this Zacks Rank #2 (Buy) stock still has enough fundamentals that may further drive the stock upward. Currently, the stock is trading at a forward P/E of 17.8x and has long-term earnings growth expectation of 6.0 %.

Growth Drivers

Impressive third-quarter fiscal 2015 results, coupled with new contract wins and technology leadership were the primary driving factors for the stock.

On Dec 9, Science Applications' reported net income of $37 million or 77 cents per share compared with $22 million or 44 cents in the prior-year period. The increase in net income was primarily driven by higher operating income.

Recently, Science Applications won the Fleet Readiness Centers Industrial Product Support Vendor (FRC IPV) contract worth $240 million from the Defense Logistics Agency (DLA). The company is focused on harnessing its rich domain knowledge and client relationships to facilitate the delivery of systems engineering and integration services for comprehensive government and commercial projects. A leading pure-play technical service provider to the U.S. government, Science Applications is the chief contractor on 91% of premier federal contract vehicles.

The company has a huge pipeline of new projects and continues to win deals at regular intervals. These contract wins are key growth catalysts for the company and further helps it augment its revenues.

Other Stocks to Consider

Other stocks worth considering in the industry include EPAM Systems, Inc (EPAM), carrying a Zacks Rank #1 (Strong Buy), and CDW Corporation (CDW) and EarthLink Holdings Corp (ELNK), both carrying a Zacks Rank #2 (Buy).