Validea Joel Greenblatt Strategy Daily Upgrade Report

Validea's Earnings Yield Investor model, based on Joel Greenblatt's strategy, upgraded ICF INTERNATIONAL INC (ICFI) from a 70% to 80% rating and SCIENCE APPLICATIONS INTERNATIONAL CORP (SAIC) from 80% to 90% based on their fundamentals and valuations; a score above 80% indicates some interest and above 90% indicates strong interest, according to the model, with SAIC passing the final ranking and ICFI failing.

Analysis

Validea's Earnings Yield Investor model, based on Joel Greenblatt's strategy emphasizing high return on capital and earnings yields, has upgraded two technology and services companies. ICF International Inc. (ICFI), a small-cap business services firm, received an increased rating from 70% to 80%, indicating 'some interest' from the model due to its underlying fundamentals and valuation. However, ICFI's detailed assessment reveals 'NEUTRAL' scores for both Earnings Yield and Return on Tangible Capital, and critically, it records a 'FAIL' on the strategy's final ranking. In contrast, Science Applications International Corp. (SAIC), a mid-cap computer services provider, was upgraded from an 80% to a 90% rating, signifying 'strong interest.' Similar to ICFI, SAIC also shows 'NEUTRAL' for Earnings Yield and Return on Tangible Capital, but importantly, it achieved a 'PASS' on the final ranking. The per-ticker sentiment further differentiates the two, with SAIC at a positive 0.7 and ICFI at a mildly positive 0.25. This suggests that while both firms saw improved model scores, SAIC aligns more successfully with the overall criteria of the Greenblatt-based strategy, despite neither exhibiting standout performance on the two explicitly mentioned core metrics in the provided table.

Key Decisions for Investors

• Investors tracking Greenblatt-style value strategies should note the Validea model's increased interest in ICFI, reflected by its upgrade to an 80% rating, but must weigh this against its 'NEUTRAL' scores on Earnings Yield and Return on Tangible Capital and a 'FAIL' on the strategy's final ranking, suggesting a need for further scrutiny of its underlying value proposition.
• For SAIC, the upgrade to a 90% 'strong interest' rating and a 'PASS' on the final ranking makes it a more compelling candidate under this specific model; nevertheless, the 'NEUTRAL' assessment for core Greenblatt metrics warrants careful consideration of whether its overall profile meets individual investment criteria for these specific factors.
• Given that both companies received 'NEUTRAL' ratings on the explicitly highlighted Greenblatt metrics, investors should understand that the model's upgraded scores likely reflect other proprietary valuation or fundamental factors, and thus should complement this specific model's signal with broader due diligence before making investment decisions.