Reviewing Science Applications International (SAIC) and Sykes Enterprises (SYKE)

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

Dividends

Science Applications International pays an annual dividend of $1.24 per share and has a dividend yield of 1.5%. Sykes Enterprises does not pay a dividend. Science Applications International pays out 35.1% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Science Applications International 3.95% 56.35% 8.87%
Sykes Enterprises 1.51% 10.07% 6.32%

Institutional and Insider Ownership

64.2% of Science Applications International shares are owned by institutional investors. Comparatively, 86.5% of Sykes Enterprises shares are owned by institutional investors. 2.1% of Science Applications International shares are owned by company insiders. Comparatively, 2.9% of Sykes Enterprises shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Science Applications International and Sykes Enterprises, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Science Applications International 0 5 4 0 2.44
Sykes Enterprises 0 2 1 0 2.33

Science Applications International presently has a consensus target price of $84.71, suggesting a potential upside of 3.28%. Sykes Enterprises has a consensus target price of $31.50, suggesting a potential upside of 8.21%. Given Sykes Enterprises’ higher possible upside, analysts plainly believe Sykes Enterprises is more favorable than Science Applications International.

Risk & Volatility

Science Applications International has a beta of 1.39, indicating that its stock price is 39% more volatile than the S&P 500. Comparatively, Sykes Enterprises has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Earnings & Valuation

This table compares Science Applications International and Sykes Enterprises’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Science Applications International $4.45 billion 0.78 $179.00 million $3.53 23.24
Sykes Enterprises $1.59 billion 0.79 $32.21 million $2.00 14.56

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

Summary

Science Applications International beats Sykes Enterprises on 11 of the 16 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 and equipment platform integration; 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. It serves the U.S. military comprising Army, Air Force, Navy, Marines, and Coast Guard; the U.S. Defense Logistics Agency; the National Aeronautics and Space Administration; the U.S. Department of State; and the U.S. Department of Homeland Security. 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 Sykes Enterprises

Sykes Enterprises, Incorporated, together with its subsidiaries, provides multichannel demand generation and global customer engagement services. Its customer care services include handling billing inquiries and claims, activating customer accounts, resolving complaints, cross-selling/up-selling, and prequalifying and warranty management, as well as providing health information and dispatching roadside assistance. The company's technical support services comprise support around complex networks, hardware and software, communications equipment, Internet access technology, and Internet portal usage. It also provides customer acquisition services, which focuses around digital marketing, demand generation, and in-bound sales conversion, as well as inbound and outbound up-selling its clients' products and services. It also provides technical staffing services to outsourced corporate help desk services; and fulfillment services, such as order and payment processing, inventory control, product delivery, and product returns handling. The company offers its services through phone, e-mail, social media, text messaging, chat, and digital self-service support. Sykes Enterprises, Incorporated provides its services to corporations, medium-sized businesses, and public institutions in the communications, financial services, technology, transportation and leisure, healthcare, retail, and other industries. It operates in the United States, Canada, Latin America, Australia, the Asia Pacific Rim, Europe, the Middle East, and Africa. Sykes Enterprises, Incorporated was founded in 1977 and is headquartered in Tampa, Florida.

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