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After Science Applications International Corporation's ( NYSE:SAIC ) earnings announcement on 01 February 2019, analyst consensus outlook appear vastly optimistic, as a 71% rise in profits is expected in the upcoming year, against the past 5-year average growth rate of 8.8%. By 2020, we can expect Science Applications International’s bottom line to reach US$235m, a jump from the current trailing-twelve-month of US$137m. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here .
Exciting times ahead?
Over the next three years, it seems the consensus view of the 7 analysts covering SAIC is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, SAIC's earnings should reach US$326m, from current levels of US$137m, resulting in an annual growth rate of 26%. EPS reaches $6.14 in the final year of forecast compared to the current $3.16 EPS today. With a current profit margin of 2.9%, this movement will result in a margin of 4.7% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Science Applications International, I've put together three important aspects you should look at:
- Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation : What is Science Applications International worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Science Applications International is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Science Applications International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.