Science Applications International Corporation (SAIC) DCF Valuation & Fundamental Primer
Science Applications International Corporation (SAIC) currently trades at $107.22 with an enterprise value of $7.80B. Our proprietary institutional model rates Science Applications International Corporation at 86/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 12.4% vs. historical growth of 26.3% (Substantial Margin of Safety).
Institutional fundamental teardown of Science Applications International Corporation (SAIC) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Science Applications International Corporation (SAIC) 3-Scenario DCF Valuation Range
Stress-test SAIC's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $107.22).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $196.89 +84% | $209.23 +95% | $223.64 +109% | $240.66 +124% | $261.08 +143% |
| 9.3% | $176.89 +65% | $186.62 +74% | $197.78 +84% | $210.74 +97% | $225.94 +111% |
| 10.0% | $160.47 +50% | $168.29 +57% | $177.15 +65% | $187.28 +75% | $198.96 +86% |
| 10.8% | $146.75 +37% | $153.14 +43% | $160.31 +50% | $168.40 +57% | $177.61 +66% |
| 11.5% | $135.12 +26% | $140.42 +31% | $146.31 +36% | $152.89 +43% | $160.30 +50% |
Institutional Software Quality Scorecard (86/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Standard software SBC dilution; modest equity transfer to employees
High-quality software margins with healthy balanced growth and profitability
Zero-debt fortress balance sheet with abundant net cash liquidity
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 309% of EBIT driven by upfront annual collections
- Healthy unit economics: 72.7% gross margin
- Fortress capital structure: Zero debt and $353.3M in pure net cash
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into SAIC?
The current share price only requires 12.4% 5-year CAGR (23.3% dilution-adjusted), well below historical growth of 26.3%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (14.0% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 23.3% 5-year revenue CAGR to justify $107.22/sh on a true per-share economic cash flow basis.
Science Applications International Corporation (SAIC) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $881.2M | $881.2M | $1.11B | $1.41B | $1.78B | $2.24B | $2.83B |
| Gross Profit | $640.6M | $640.6M | $809.1M | $1.02B | $1.29B | $1.63B | $2.06B |
| Operating Income (EBIT) | $72.3M | $72.3M | $91.3M | $115.3M | $145.6M | $183.9M | $232.2M |
| Stock-Based Compensation (SBC) | $123.4M | $123.4M | $155.8M | $196.8M | $248.5M | $313.9M | $396.5M |
| Unlevered Free Cash Flow (FCF) | $222.9M | $222.9M | $281.6M | $355.6M | $449.1M | $567.3M | $716.5M |
| SBC-Adjusted True Cash Flow | $99.6M | $99.6M | $125.8M | $158.8M | $200.6M | $253.4M | $320.0M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -31.1 + 0.81 × (Rule of 40) · R² = 65%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Science Applications International Corporation | SAIC | $4.93B | $881.2M | 72.7% | 25.3% | 51.6% | 14.0% | 5.2× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 5.2× | $4.58B | $4.93B | $107.22 | 0.0% |
| -20% Multiple Compression | 4.2× | $3.66B | $4.02B | $87.31 | -20.0% |
| -35% Multiple Compression | 3.4× | $2.98B | $3.33B | $72.38 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $4.41B | $4.76B | $103.41 | -3.8% |
Frequently Asked Questions: Science Applications International Corporation (SAIC) Valuation
What is Science Applications International Corporation (SAIC)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Science Applications International Corporation (SAIC) has a Base Case implied value of $177.15 per share (with a Bear Case of $73.12 and a Bull Case of $332.98), compared to its current price of $107.22. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Science Applications International Corporation (SAIC)'s Rule of 40 score and Free Cash Flow margin?
Science Applications International Corporation achieves a Rule of 40 score of 51.6%, combining a 26.3% revenue growth run-rate with a 25.3% TTM free cash flow margin on $881.2M in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into SAIC stock according to Reverse-DCF analysis?
At $107.22 per share (Enterprise Value of $4.58B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 12.4%, compared to Science Applications International Corporation's historical CAGR of 26.3%. Overall market expectations are rated as "Substantial Margin of Safety".
How does Science Applications International Corporation compare to Software & Cloud Services software peers?
Science Applications International Corporation (SAIC) earns an institutional Software Quality Score of 86/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Science Applications International Corporation (SAIC)'s valuation?
Science Applications International Corporation recorded $123.4M in TTM stock-based compensation (14.0% of revenue). When treating SBC as a cash-equivalent compensation expense, Science Applications International Corporation's SBC-adjusted free cash flow yield is 2.0%, scoring 16/25 on our Shareholder Dilution Friction pillar.