Science Applications International (SAIC) is a leading provider of technical, engineering and enterprise information technology (IT) services primarily to the U.S. government, suggests Taesik Yoon, editor of the industry leading advisor service Forbes Investor.

Its long-standing customer relationships have enabled it to achieve an in-depth understanding of its customers’ missions and provide differentiated solutions to meet their most complex requirements.

The company has a long and successful history of over 50 years serving all branches (Army, Air Force, Navy, Marines and Coast Guard) and agencies of the Department of Defense, National Aeronautics and Space Administration (NASA), U.S. Department of State, Department of Justice and several sensitive intelligence community agencies.  

Despite SAIC employees and subcontractors not being able to access facilities to perform on customer contracts as a result of the pandemic, which reduced the top line by $33 million, the quarterly revenues still came in $37 million higher than expected. 

Even with the negative impact on Q1 from the pandemic, SAIC still produced $158 million in free cash flow in the period.  This allowed the company to make a $125 million prepayment on its debt a few weeks after the quarter ended despite initially saying that it would temporarily suspend such voluntary repayment activity due to the uncertainty created by the pandemic. 

In fact, boosted by this strong cash flow performance to start the year, SAIC now expects free cash flow for all of fiscal 2021 to meet or exceed $500 million, which is actually $50 million above its prior view.

With this indicating that any concerns over its debt load are overblown and with no materially negative company-specific developments since its earnings release four weeks ago, we believe the recent dive in SAIC’s stock has created a great buying opportunity that could pay off quickly.

Subscribe to Forbes Investor here…