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With Strong Backlog, Science Applications Could Be Undervalued Defense Stock

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With Strong Backlog, Science Applications Could Be Undervalued Defense Stock

The 2020 presidential election has caused several sectors to go up and down as Americans wait to find out who the next president of the United States will be. 

Politico reports that Democrat Joe Biden would put more of an emphasis on cybersecurity and related fields for the defense sector if elected. This could be good news for one mid-cap government contract company.

About Science Applications: IT support, maintenance of information systems, software applications, web services and databases company Science Applications International (NYSE: SAIC) is a key Defense Department contractor.

The company says it's “driving our nation’s digital transformation across the defense, space, civilian and intelligence markets.”

Related Link: P/E Ratio Insights For Science Applications

Increasing Backlog: On Wednesday, Science Applications was awarded part of a $620-million IT contract with four other companies by the Department of Agriculture.

On Oct. 29, the company announced a $737-million contract with the U.S. Air Force.

In the second quarter, the company announced $4.56 billion in net bookings. The company’s book-to-bill ratio for the second quarter was 2.6, which was the best in the company’s seven-year history.

Science Applications' total backlog stood at $19.4 billion for the second quarter, improving again on the backlogs of $16.6 billion and $15.3 billion reported in May and January, respectively.

Science Applications Financials: Science Applications reported revenue of $1.8 billion, an 11% year-over-year increase.

The company had trailing 12-month revenue of $7.1 billion. The Defense Department represents 49% of company revenue, split between the Air Force, Army, Navy, Marines and other.

Federal civilian and intelligence represent 33% and 16%, respectively, of trailing 12-month revenue.

The company will report third-quarter earnings Dec. 3 

SAIC Price Action: Shares of Science Applications were up 2.06% at $85.53 at last check Thursday. 

 

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