Critical Analysis: Science Applications International (NASDAQ:SAIC) versus Accenture (NYSE:ACN)

Science Applications International (NASDAQ:SAIC) and Accenture (NYSE:ACN) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Dividends

Science Applications International pays an annual dividend of $1.48 per share and has a dividend yield of 1.7%. Accenture pays an annual dividend of $6.52 per share and has a dividend yield of 2.6%. Science Applications International pays out 17.9% of its earnings in the form of a dividend. Accenture pays out 53.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Accenture has raised its dividend for 20 consecutive years. Accenture is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Science Applications International has a beta of 0.43, indicating that its stock price is 57% less volatile than the S&P 500. Comparatively, Accenture has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.

Earnings & Valuation

This table compares Science Applications International and Accenture”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Science Applications International	$7.48 billion	0.53	$362.00 million	$8.26	10.44
Accenture	$69.67 billion	2.36	$7.68 billion	$12.15	20.58

Accenture has higher revenue and earnings than Science Applications International. Science Applications International is trading at a lower price-to-earnings ratio than Accenture, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Science Applications International and Accenture’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Science Applications International	5.35%	33.36%	9.90%
Accenture	11.02%	26.45%	13.21%

Analyst Ratings

This is a summary of recent ratings for Science Applications International and Accenture, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Science Applications International	0	1	0	0	2.00
Accenture	1	11	15	1	2.57

Accenture has a consensus price target of $294.25, indicating a potential upside of 17.70%. Given Accenture’s stronger consensus rating and higher probable upside, analysts clearly believe Accenture is more favorable than Science Applications International.

Insider & Institutional Ownership

76.0% of Science Applications International shares are held by institutional investors. Comparatively, 75.1% of Accenture shares are held by institutional investors. 0.4% of Science Applications International shares are held by company insiders. Comparatively, 0.0% of Accenture shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Accenture beats Science Applications International on 14 of the 18 factors compared between the two stocks.

About Science Applications International

Science Applications International Corporation provides technical, engineering, and enterprise information technology (IT) services primarily in the United States. The company’s offerings include engineering; technology integration; IT modernization; maintenance of ground and maritime systems; logistics; training and simulation; operation and program support services; and end-to-end services, such as design, development, integration, deployment, management and operations, sustainment, and security of its customers’ IT infrastructure, as well as cloud migration, managed services, infrastructure modernization, and enterprise IT-as-a-service solutions. It serves the U.S. military comprising Army, Air Force, Navy, Marines, and Coast Guard; Department of Defense agencies; National Aeronautics and Space Administration; the U.S. Department of State; Department of Justice; Department of Homeland Security; and various intelligence community agencies, as well as U.S. federal civilian agencies. The company was formerly known as SAIC Gemini, Inc. and changed its name to Science Applications International Corporation in September 2013. Science Applications International Corporation was founded in 1969 and is headquartered in Reston, Virginia.

About Accenture

Accenture plc, a professional services company, provides strategy and consulting, industry X, song, and technology and operation services worldwide. The company offers application services, including agile transformation, DevOps, application modernization, enterprise architecture, software and quality engineering, data management; intelligent automation comprising robotic process automation, natural language processing, and virtual agents; and application management services, as well as software engineering services; strategy and consulting services; data and analytics strategy, data discovery and augmentation, data management and beyond, data democratization, and industrialized solutions comprising turnkey analytics and artificial intelligence (AI) solutions; metaverse; and sustainability services. It also provides change management, HR transformation and delivery, organization strategy and design, talent strategy and development, and leadership and culture services; digital commerce; infrastructure services, including cloud infrastructure managed, cloud and data center, network, digital workplace, database platforms, service management, and cloud and infrastructure security services; data-enabled operating models; technology consulting and AI services; and technology consulting services. In addition, the company offers engineering and R&D digitization, smart connected products, product as-a-service enablement, capital projects, intelligent asset management, digital industrial workforce, and autonomous robotic systems; business process outsourcing; and services related to technology innovation. Further, it provides cloud, ecosystem, marketing, security, supply chain management, zero-based transformation, customer experience, finance consulting, mergers and acquisitions, and sustainability services. The company has a collaboration with Salesforce, Inc. to develop Salesforce Life Sciences Cloud. The company was founded in 1951 and is based in Dublin, Ireland.