SAIC has gotten torched over the last six months – since May 2025, its stock price has dropped 23.4% to $91.70 per share. This may have investors wondering how to approach the situation.
Is now the time to buy SAIC, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free for active Edge members.
Despite the more favorable entry price, we’re cautious about SAIC. Here are three reasons we avoid SAIC and a stock we’d rather own.
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, SAIC’s 2.2% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks.
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect SAIC’s revenue to drop by 2.3%, close to its 2.2% annualized growth for the past five years. This projection is underwhelming and suggests its newer products and services will not catalyze better top-line performance yet.
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, SAIC’s margin dropped by 2.5 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. SAIC’s free cash flow margin for the trailing 12 months was 4.7%.
SAIC doesn’t pass our quality test. Following the recent decline, the stock trades at 10.7× forward P/E (or $91.70 per share). This multiple tells us a lot of good news is priced in – you can find more timely opportunities elsewhere. Let us point you toward the Amazon and PayPal of Latin America.
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