Last week you may have seen this International Society for Scientific Applications (NYSE: SAIC) released its third quarter result to the market. The initial response was not positive, with stocks falling 2.3% to US $ 83.34 last week. This seems like a credible result overall – although revenue of $ 1.9 billion was what analysts expected, Science Applications International surprised with a (statutory) profit of US $ 1.22 per share. , an impressive 26% above forecast. This is an important time for investors, as they can follow a company’s performance in its report, review experts’ forecasts for next year, and see if there has been a change in the company’s expectations. business. So we’ve collected the latest post-profit statutory consensus estimates to see what might be in store for next year.
Following the latest results, the eight analysts at Science Applications International are now forecasting revenue of US $ 7.63 billion in 2023. This would represent a reasonable improvement in sales of 4.1% from the past 12 months. Earnings per share are expected to increase 5.7% to US $ 5.50. Before this report was written, analysts had modeled revenues of US $ 7.73 billion and earnings per share (EPS) of US $ 5.69 in 2023. So it appears that there has been a slight decline general sentiment after recent results – there hasn’t been a major change in earnings estimates, but analysts have lowered their earnings per share forecast slightly.
It might come as a surprise to learn that the consensus price target has remained broadly unchanged at US $ 102, with analysts clearly hinting that the expected decline in earnings is unlikely to have much of an impact on valuation. The consensus price target is only an average of individual analysts’ targets, so it might be helpful to see the breadth of the range of underlying estimates. The most bullish analyst at Science Applications International has a price target of US $ 111 per share, while the most pessimistic puts it at US $ 80.00. This shows that there is still a bit of diversity in the estimates, but analysts don’t seem totally divided over the title as if it is a hit or miss situation.
Looking at the big picture now, one of the ways we can make sense of these forecasts is to see how they stack up against both past performance and industry growth estimates. It’s pretty clear that Science Applications International’s revenue growth is expected to slow significantly, revenue by the end of 2023 is expected to grow 3.3% on an annualized basis. This is compared to a historic growth rate of 13% over the past five years. Compare that to other companies (with analysts’ forecasts) in the industry, which are expected to experience revenue growth of 9.0% per year overall. So it’s pretty clear that while revenue growth is expected to slow, the industry at large is also expected to grow faster than Science Applications International.
The bottom line
The most important thing to remember is that analysts have lowered their earnings per share estimates, showing that there has been a marked drop in sentiment following these results. On the positive side, there has been no major change in income estimates; although forecasts imply that revenues will outperform the industry as a whole. The consensus price target has not really changed, suggesting that the intrinsic value of the company has not undergone any major changes with the latest estimates.
That said, the company’s long-term profit trajectory is much bigger than next year. At Simply Wall St, we have a full range of analyst estimates for Science Applications International going through 2024, and you can see them for free on our platform here..
However, you should always think about the risks. Concrete example, we have spotted 2 warning signs for Science Applications International you need to be aware of it, and one of them is important.
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