If a CFO is buying company shares, it’s often worth investigating the stock further. CFOs have considerable insights into their firms’ financials, and some studies have found that these insiders earn higher profits from their share purchases than CEOs do.
In this report, we are going to highlight a substantial CFO purchase at Science Applications International Corporation (SAIC:US). Science Applications International is a technology company that provides services to the US Department of Defense. Specializing in technology integration and digital transformation, it offers solutions relating to IT modernization, cybersecurity, cloud computing, and data analytics. The company is listed on the New York Stock Exchange and currently has a market capitalization of $4.7 billion.
Science Applications International Corporation: Insider Buying
Our data shows that between December 10 and December 13, CFO Prabu Natarajan bought 3,000 SAIC shares at an average price of $82.35 per share. This trade cost the insider around $247,000 and increased his holding to 15,851 shares.
This trading activity is worth highlighting for a couple of reasons. Firstly, Mr. Natarajan has significant experience in the d efense industry. Prior to joining SAIC, he was vice president of financial planning and merger and acquisition for Northrop Grumman and a member of the company’s Chief Financial Officer Council. This means he is likely to have a good understanding of his firm’s prospects.
Secondly, Mr. Natarajan has shown the ability to buy the dips well here in the recent past. Back in April, the insider picked up 3,000 shares at a price of $84.31 after a pullback. Over the next two months, the stock bounced more than 10%.
SAIC’s recent Q3 results were solid.
For the period, revenue came in at $1,898 million, up 4% year on year due to ramp up on new and existing contracts. Meanwhile, net income attributable to common stockholders was up 18% to $71 million. Adjusted diluted earnings per share (EPS) amounted to $1.85, up 14% year on year.
“Our strong results and sustained growth reflect the continued progress we are making in aligning SAIC with areas of increasing customer demand. We continue to see attractive opportunities to profitably grow our business,” commented SAIC CEO Nazzic Keene.
As a result of this solid performance, the company raised its guidance for the full fiscal year 2022. It now expects adjusted diluted EPS of $6.75 to $6.95 versus previous guidance of $6.50 to $6.70.
Since these results, the company has been awarded a $1.1 billion contract by the US Navy. It has also been awarded a $99 million contract by the US Air Force.
In light of these developments, we see the insider buying here as a bullish indicator.