Core Viewpoint - SAIC's stock appears undervalued despite recent challenges, with a significant increase in share price following a strong earnings report, indicating potential for future growth if the company can resume its growth trajectory [1][2]. Financial Performance - SAIC reported fiscal Q3 2026 earnings that exceeded analyst expectations, achieving $2.58 per share in profit against a forecast of $2.15, with sales matching the expected $1.87 billion [1]. - However, sales declined by 6% and operating profit fell by 20%, leading to a 120-basis-point decrease in operating margin [2]. - Net profit, calculated under GAAP, decreased by 21% to $1.69 per diluted share, despite adjusted bottom-line profits only falling by 1% [2]. Cash Flow and Guidance - The company significantly increased its free cash flow, generating $135 million in the quarter, surpassing both reported operating income and net income [3]. - SAIC's book-to-bill ratio stands at 1.2x, indicating potential for sales growth, with management slightly raising sales guidance to approximately $7.3 billion for the year [5]. - Adjusted profit is projected to be between $9.80 and $10 per share, with free cash flow expected to exceed $550 million [5]. Valuation Metrics - SAIC's market capitalization is around $4 billion, with a price-to-free cash flow ratio of 8.9 based on the expected $550 million in free cash flow [6]. - Even when considering debt, the enterprise value to free cash flow ratio is 13.3x, suggesting that the stock is reasonably priced and does not require rapid growth to justify its valuation [6].