Abstract

Science Applications International Corp. will release fiscal fourth-quarter 2026 results on March 16, 2026 Pre-Market; this preview summarizes consensus ranges for revenue, margins, net income and adjusted EPS, contrasts them with management’s latest outlook, and highlights the segments and catalysts most likely to influence near-term share performance.

Market Forecast

Consensus modeling points to fiscal Q4 revenue near 1.76 billion, implying a year-over-year decline of 2.69%, and adjusted EPS around 1.89, implying a year-over-year decline of 9.16%; the market also expects EBIT of about 142.98 million, which would be up 7.07% from a year earlier. Management’s latest outlook indicates approximately 1.75 billion in revenue and adjusted EPS of 2.30 to 2.50 for the quarter, suggesting potential outperformance versus consensus on profitability while acknowledging softer top-line timing.

The company’s core revenue base remains concentrated in U.S. federal programs, with Department of Defense work, intelligence and other federal agencies, and a smaller commercial and state/local footprint; near-term performance will be driven by award timing, program ramps, and delivery mix. Intelligence and other federal agencies work (849.00 million last quarter) appears best positioned for incremental growth as new awards, including a recently announced 95.00 million engagement, begin to phase into revenue; year-over-year growth rates for the segment were not disclosed.

Last Quarter Review

In the most recent reported quarter, Science Applications International Corp. delivered 1.87 billion in revenue (down 5.57% year over year), a gross profit margin of 12.16%, GAAP net income attributable to the company of 78.00 million, a net profit margin of 4.18%, and adjusted EPS of 2.58 (down 1.15% year over year). Quarter-on-quarter GAAP net income declined by 38.58%, reflecting seasonal and program mix dynamics.

A notable financial highlight was the adjusted EPS performance of 2.58 versus a prior estimate of 2.15, supported by cost discipline and operating efficiency despite lower-than-estimated revenue; EBIT of 128.00 million reflected a 34.36% year-over-year decline as program mix and delivery cadence weighed on operating income. By end-market, revenue composition was led by Department of Defense awards at 972.00 million (52.09% of the quarter), followed by intelligence and other federal agencies at 849.00 million (45.50%), and commercial, state and local, and international customers at 45.00 million (2.41%), underscoring the predominance of U.S. federal demand in the revenue base.

Current Quarter Outlook (with major analytical insights)

Core Federal Programs and Defense Execution

The core book of federal programs remains the central determinant of quarterly performance. Based on the company’s guidance of approximately 1.75 billion in revenue, top-line delivery is tracking modestly below recent quarters as certain awards and task orders shift right, while the adjusted EPS range of 2.30 to 2.50 indicates that margin and cost control should underpin earnings quality. The interplay between award timing and revenue conversion will be crucial: a stronger-than-expected conversion of funded backlog in the final weeks of the fiscal quarter could narrow the revenue gap to consensus, but management’s communicated range already embeds a conservative view on timing.

Program mix should continue to shape margin prints. The prior quarter’s gross margin of 12.16% and net margin of 4.18% provide a baseline; management’s raised full-year adjusted EPS outlook (shared recently) points to sustained discipline on indirect cost pools and efficient delivery, which can partially offset softer revenue. Investors should watch for commentary on booked-to-bill and any acceleration in task order issuances within Department of Defense portfolios, as these factors will influence fiscal Q4 close and inform the entry rate for fiscal 2027.

An additional factor for this quarter is sequential earnings cadence after a sharp quarter-on-quarter net income step-down last quarter (down 38.58%). With costs already sized to funded demand and a concentrated mix in federal programs, incremental revenue conversion can deliver disproportionate EPS leverage. Conversely, if award delays persist late into the quarter, the revenue shortfall risk relative to consensus is more likely to show up in top-line print than in margin, given expense controls and refined staffing plans.

Intelligence and Civilian Agencies: Near-Term Growth Opportunity

The intelligence and other federal agencies segment, which generated 849.00 million last quarter, is emerging as a near-term growth lever as recent awards begin to phase in. A newly announced 95.00 million engagement with a federal oversight body provides incremental visibility and should contribute to backlog momentum; while the revenue recognition from this contract will be spread over its period of performance, its presence supports management’s confidence in earnings resilience. Given the company’s guidance for fiscal Q4 EPS to exceed street expectations, this unit’s margin profile and delivery mix are likely supportive of near-term profitability.

Award timing remains the swing factor. Even with favorable wins, on-contract growth must traverse the typical ramp sequence—award, onboarding, and scaled delivery—before contributing materially to in-quarter revenue. Management’s tempered revenue outlook acknowledges this cadence. If on-ramps achieve milestones earlier in the quarter, revenue performance within intelligence and civilian programs could surprise to the upside, moderating the headline year-over-year decline in consolidated revenue. Absent that, the contribution will be more visible in subsequent quarters, while this quarter’s EPS can still benefit from mix and cost discipline.

The path from booking to revenue also carries implications for future guidance. Updates on pipeline conversion and any commentary on recompete dynamics across intelligence and civilian portfolios will carry significant weight for the stock, as investors calibrate whether the fiscal Q4 trajectory is a trough, a plateau, or an early stage of a recovery in funded task order flow. A constructive booked-to-bill above 1.0x would help frame the setup into fiscal 2027 despite management’s broader revenue caution for the coming year.

Key Stock Price Drivers This Quarter

The first driver is the revenue print relative to both consensus and management’s own guidance. The consensus revenue expectation near 1.76 billion implies a 2.69% decline year over year, while management has directed investors to about 1.75 billion; deviation from that range will likely drive the initial reaction. If revenue aligns with the 1.75 billion level but adjusted EPS lands in the upper half of the 2.30 to 2.50 range, the market may rotate focus from top-line softness to earnings quality, pricing power embedded in contract structures, and free cash flow conversion.

Second, the earnings bridge versus consensus matters. The market’s adjusted EPS expectation near 1.89 contrasts with management’s 2.30 to 2.50 guide, implying an anticipated EPS beat that stems from mix, operating discipline, and possibly lower share count or interest expense. Actual margin prints will be important because the prior quarter’s net margin was 4.18% and gross margin 12.16%; incremental expansion on those metrics would validate the higher EPS range even with lower revenue. Investors will scrutinize whether EBIT (estimated at 142.98 million, up 7.07% year over year) trends consistently with the EPS outcome.

Third, qualitative updates will influence forward multiples. Recent news of leadership continuity—elevating James Reagan from interim to permanent CEO—should reduce governance uncertainty into the print and provide a consistent strategic narrative on capital deployment, portfolio focus, and risk management. Contract momentum, highlighted by the recent 95.00 million federal award, strengthens the backlog story, yet management’s reduced fiscal 2026 and 2027 revenue outlook signals prudence regarding procurement cycles and customer award timing. Commentary reconciling these dynamics—near-term revenue softness versus improving earnings algorithm—will be central to how the stock trades post-release.

Analyst Opinions

The prevailing institutional tone is cautious ahead of the report. One recent rating action maintained a Hold stance with a 115.00 price target, reflecting a balanced but guarded view that weighs near-term revenue timing headwinds against evidence of earnings resilience. Taken together with management’s communication lowering revenue expectations for fiscal 2026 and 2027 while raising the full-year adjusted EPS outlook, the majority institutional posture skews toward focusing on downside risks to the top line even as profitability and cash generation appear better supported.

Under this cautious framework, the core debate centers on whether earnings quality can offset softer top-line trends. The company’s own fiscal Q4 guide—revenue of about 1.75 billion and adjusted EPS of 2.30 to 2.50—suggests that margin structure and operating rigor should drive an EPS beat versus consensus near 1.89; however, the top line likely remains constrained by award delays and pacing in task order starts. Analysts emphasizing this setup argue that the stock’s near-term multiple is more likely to be sensitive to revenue trajectory and booked-to-bill signals than to an EPS beat achieved via mix and cost performance.

A central implication of the cautious view is that forward guidance will carry more weight than the quarter itself. Commentary on conversion of recent wins in intelligence and civilian agencies, visibility into Department of Defense program ramps, and any markers for acceleration in the pace of procurement will guide sentiment on whether revenue growth can re-accelerate into fiscal 2027. Should the company deliver strong evidence that award phasing is transitory and that backlog will convert at a healthier clip in the coming quarters, the cautious stance could moderate. Until then, the majority expectation is for solid earnings, softer revenue, and a guidance narrative that keeps investors patient rather than exuberant.