Saab (OM:SAAB B) Q3 Results Keep Backlog Growth In Focus

Saab just reported Q3 2026 and the stock closed today at SEK646.5 after a flat week that masks a far stronger 90 day climb of about 10%. The headline is clear: this is an order book and capacity story, not a quick EPS trade. With a reported trailing P/E of 46.3x against lower industry multiples and a discounted cash flow reference value far under the current quote, the market is still paying up for a defence growth narrative while largely brushing off how much balance sheet strength and cash flow already support that bet.

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Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs Q3 2025): SEK20,553m vs. SEK15,871m (up about 29.5%)
• Net Income, Excl. Extra Items (Q3 2026 vs Q3 2025): SEK1,389m vs. SEK957m (up about 45.1%)
• Basic EPS (Q3 2026 vs Q3 2025): SEK2.58 vs. SEK1.78 (up about 44.7%)
• Trailing 12 Month Net Profit Margin (Q3 2026 vs Q3 2025): 8.1% vs. 7.2% (improved by about 0.9 percentage points)

Ask Charlie what Saab’s huge backlog means for future margins.

Evaluating Saab’s Backlog Conversion Milestones

The bullish story hangs on Saab turning a huge order book into profitable, on time deliveries rather than just headline growth.

"The main requirement for this outcome is Saab successfully scaling its expanding global production footprint and supply chain, including new facilities and thousands of hires per year, so that large contracts such as A26 submarines and Gripen E fighters convert into timely deliveries with solid margins despite program drag and material bottlenecks."

Q3 progress points in the right direction. Backlog has risen to SEK364b with large wins in Gripen, GlobalEye and Polish submarines, while 9M organic sales growth above 27% and EBIT up about 39% show capacity additions starting to feed through. Margin drag from T 7 and early stage naval work is still visible, yet group EBIT margin at 9.5% and rolling 12 month cash flow of SEK14.1b indicate Saab is funding this ramp from a position of strength rather than strain.

The price and this Narrative do not agree. → Uncover what this Narrative says Saab is actually worth.

Saab Bear Case: Profit Drag Still Visible

The key worry is that Saab’s big project wins come with stubborn profit leaks attached. Bears argue that subscale and open book work could quietly chip away at returns even as the backlog grows.

"Although Saab is investing roughly SEK 10b per year in new and automated facilities across Sweden, the U.S. and India to support higher long term demand, the ongoing negative contribution from subscale programs such as the T-7 trainer and the SEK 200m of bid related costs booked in Naval indicate that under absorption and bid write downs may persist as the footprint grows, which could limit the benefit of higher capacity on group EBIT."

Q3 confirms the T 7 trainer is still a roughly SEK500m per year drag and Naval margins are held back by early stage work. Group EBIT margin at 9.5% and strong 77% cash conversion show these issues are absorbed for now rather than resolved. The execution overhang that bearish investors focus on has not cleared in this quarter.

Find Capacity Stories Before They Peak

Saab highlights how a substantial backlog and ongoing investment can complicate valuation debates. The real opportunity could be stocks that appear undervalued before stronger earnings make that clearer.

• Company 1 - 32% below our estimate - shifts its mix toward higher margin specialty chemicals while scaling new defense and creatine capacity on committed customer demand.
• Company 2 - 25% below our estimate - leans on AI data center optics as fresh manufacturing lines fill with higher value photonics and advanced packaging work.
• Company 3 - 29% below our estimate - ramps data center power capacity while converting co location sites into higher yielding sovereign cloud and managed service workloads.

Those are three of them. See every one of the 192 undervalued companies on it →

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