SAIC Wins $45.2M Warfare Training Order From Pacific Fleets

Science Applications International Corp. (NYSE:SAIC) recently received a three-year, single-award, follow-on contract worth $45.2 million to continue supporting the Navy and Marine Corps in tactical warfare training.

Science Applications, the only awardee of this order, will work with three subcontractors — American Systems, Prairie Quest and Stellar Peak.

According to the deal, Science Applications will continue providing technical support for tactical warfare training to various Navy and Marine training formations, including the Tactical Training Group Pacific in San Diego, CA; the Expeditionary Warfare Training Group Pacific in Coronado, CA; the Tactical Training Group Detachment in Yokosuka, Japan; and Carrier Strike Group 15 in San Diego.

Science Applications’ updated instructions related to tactics and techniques, practical applications and wargaming support, and classroom training with government-approved training systems. These are some of the key solutions the company provides to the Navy and Marine Corps.

SAIC Rides on Contract Wins

Science Applications is benefiting from the continuous flow of high-value contracts. A record level of awards reflects its disciplined business development actions, consistent operational excellence and high customer satisfaction. Notably, as of Dec 5, 2019, the company’s total contract backlog was $14.5 billion.

Furthermore, having the government as a big client lends stability to the business and moderates fluctuation in revenues. Although the government generally has a lengthy approval process, the projects earn money for several years after approval.

Notably, Science Applications reportedly was awarded $2.8 billion in national security contract awards for fiscal 2020.

In January, the company received a $727-million Common Computing Environment (Cloud One) contract from the U.S. Air Force to aid the transformation of about 800 Air Force and U.S. Army mission applications to the cloud.

Moreover, in November last year, the company received contracts worth $582 million from space and intelligence community customers.

Again, in September 2019, it secured an eight-year prime contract worth $85 million to provide advanced IT support and maintenance services for Anaheim, CA’s infrastructure, applications and workplace solutions.

Back-to-back contract wins are the key catalysts driving the business perennially for Science Applications. Per ResearchAndMarkets, the size of the global Military Simulation and Virtual Training market, which was around $10.25 billion in 2018, is expected to grow to $15.28 billion by 2027, at a CAGR of 4.54%. This forecast bodes well for Science Applications, which is a key supplier in this space.

Zacks Rank & Stocks to Consider

Science Applications currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader technology sector are HP Inc. (NYSE:HPQ) , Cirrus Logic, Inc. (NASDAQ:CRUS) and Mellanox Technologies, Ltd. (NASDAQ:MLNX) , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for HP, Cirrus and Mellanox is currently pegged at 2%, 15.27% and 18.25%, respectively.

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