SAIC Shares Got Crushed: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of government contractor SAIC (NYS: SAI) have fallen 12% in intraday trading today after the company released earnings.

So what: In the second quarter, revenue fell 6% to $2.60 billion and earnings per share of $0.50. The company's continuing operations earned $0.32 per share, down from $0.42 last year and $0.03 below expectations.

Now what: Government dollars aren't flowing as freely as they were last year, and as a result it's putting pressure on SAIC's business. Besides the weak results, the company lowered full-year guidance to $1.30 to $1.40 in earnings per share, which is below expectations. Shares aren't terribly expensive at just over 10 times the bottom end of that range, but with earnings heading in the wrong direction, I'm not inclined to be a buyer today. After all, government spending is only going to get tighter from here.

Interested in more info on SAIC? Add it to your watchlist.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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