SAIC Earnings TOP Revenue Estimates, Investors BID UP Shares

S&P 500 (NYSE:SPY) component SAIC Inc. (NYSE:SAI) reported its results for the second quarter. SAIC provides scientific, engineering, systems integration and technical services and solutions to all branches of the U.S. military and other government entities.

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SAIC Inc. Earnings Cheat Sheet

Results: Net income for SAIC Inc. fell to $110 million (32 cents per share) vs. $178 million (50 cents per share) a year earlier. This is a decline of 38.2% from the year-earlier quarter.

A Closer Look: SAIC Inc Earnings Cheat Sheet>>

Revenue: Rose 9.7% to $2.85 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: SAIC Inc. fell short of the mean analyst estimate of 33 cents per share. It beat the average revenue estimate of $2.69 billion.

Quoting Management: “Our 8% internal revenue growth during the quarter highlights our strong market position, disciplined execution of our strategy, and the dedicated efforts of our employees,” said John P. Jumper, chairman and chief executive officer. “In announcing today the next step of our strategic plan to separate into two publicly traded companies, we configure ourselves for the future. Our two companies will be designed so that the businesses can be more differentiated and more competitive in their own space. More importantly, that addressable space will expand for each as we eliminate the burden of organizational conflicts of interest which have restricted our overall business. This affords both companies an excellent opportunity to combine optimized cost structures, unrestricted access to their respective markets, and the leveraging of decades of SAIC’s scientific and engineering excellence. This will unleash the growth and value we can deliver to our customers, employees and shareholders.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 0.9 percentage point from the year-earlier quarter to 12.1%. Over that time, margins have contracted on average 3.6 percentage points per quarter on a year-over-year basis.

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by 3 cents with net income of 31 cents versus a mean estimate of net income of 34 cents per share.

The company’s revenue has now risen for two straight quarters. In the first quarter, revenue increased 3.5% to $2.78 billion from the year-earlier quarter.

Looking Forward: Over the past ninety days, the average estimate for the third quarter has fallen from 34 cents per share to 33 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $1.35 per share, down from $1.38 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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