AMTM Stock Q3 FY2026: A Record $48B Backlog, And Revenue Still Fell

Amentum (AMTM) Q3 FY2026 — Q3 FY2026 (ended July 3; 8-K accepted 4:42pm ET Aug 10, AFTER the close): adjusted EPS $0.67 vs $0.611, revenue $3,490M vs $3,572M, EBITDA margin +60bp to 8.3%, free cash flow +35%, net leverage 3.0x, backlog a record $48.2B - and full-year REVENUE guidance was cut. The stock fell 8.2% on 3.5x volume, to $21.47. Amentum beat on adjusted EPS, widened margin, grew free cash flow 35%, cut net leverage to 3.0x and posted a record $48.2B backlog - and the stock fell 8.2%. One line went the wrong way: revenue fell 2% and the full-year revenue guide was cut for the first time all year, to a ceiling that is exactly the old floor. THE CALL: BUY (3/5, THE BACKLOG IS REAL, THE CASH IS THE TEST) — base-case value ~$27 vs ~$21.47 today. KEY METRICS: - CALL: BUY, 3/5. Fair value ~$27 vs the $21.47 close on Aug 14 - about 24% upside. Bull $37, bear $16, weighted 32/45/23, discounted at 10.30% (9.55% cost of equity on a 1.05 beta plus a stated 0.75pt premium for single-customer concentration and a shrinking top line). Our $27 is 4% BELOW the Street's $27.80 mean. We disagree on the rating, not the value: 5 buy, 6 hold, 0 sell. - THE QUARTER (3 months ended Jul 3, 2026): revenue $3,490M, DOWN 2%, vs a $3,572M estimate - a 2.3% miss. Adjusted diluted EPS $0.67 vs a $0.611 bar, a 9.7% beat and up 20% from $0.56. GAAP diluted EPS $0.27 vs $0.04. Adjusted EBITDA $290M vs $274M - an 8.3% margin vs 7.7%, up 60bp. Free cash flow $135M vs $100M on $11M of capex. - GUIDANCE - ONE LINE CUT, TWO RAISED: full-year revenue went from $13.95B-$14.30B to $13.80B-$13.95B, so the NEW CEILING IS EXACTLY THE OLD FLOOR - a $250M midpoint cut, and the first reduction of the year after two reaffirmations. Adjusted EPS was RAISED to $2.40-$2.50 from $2.25-$2.45, EBITDA to $1,115M-$1,140M, free cash flow unchanged at $525M-$575M. - WHY BACKLOG RISES WHILE REVENUE FALLS: backlog hit a record $48.2B, up 8% from $44.6B, on $17.7B of net bookings and a 1.3x LTM book-to-bill; funded backlog $6.2B. About three points of the revenue decline is contracts moving from consolidated to UNCONSOLIDATED joint ventures - sales leave the top line, profit returns as equity earnings, up $18M to $28M - plus divestitures. - THE CASH-QUALITY FLAG: nine-month free cash flow is $213M vs $255M a year ago, yet the full-year guide is unchanged - so $312M-$362M, about 61% of the year, must land in Q4 against $261M last year. And $120M of this year's operating cash flow is the change in receivables SOLD under the MUFG MARPA facility, vs $42M last year. Strip it and nine-month cash is $93M. - VALUATION AND PEERS: 244,506,413 shares (10-Q cover, Aug 7) at $21.47 is $5,250M of market value; $3,875M of debt less $459M cash is $3,416M net, so enterprise value is $8,666M - 7.7x the FY2026 EBITDA guide, 8.8x the EPS guide and a 10.5% free cash flow yield. On trailing GAAP EBITDA, the basis FMP uses for peers, AMTM is 8.6x vs KBR 8.7x, Leidos 10.5x, SAIC 10.8x. What to watch: UP: Q4 free cash flow inside $312M-$362M on Nov 23 that is NOT carried by a larger receivable sale. DOWN: the MARPA balance sold rising again - this year's cash borrowed from next year's. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.