Saab came into Q3 2026 riding strong 12 month earnings momentum and a rich valuation, with the stock on a trailing P/E of 46.3x and trading at SEK646.5 into the results. The company just printed another solid defence quarter, led by a SEK364b order backlog and 9 month organic growth above 27%, yet the share price barely moved over the past week. For investors who bought into the long term European defence story, the key issue now is the gap between that premium valuation and a discounted cash flow estimate that sits far below today's price.
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Q3 2026 Earnings Summary
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Revenue (Q3 2026 vs Q3 2025):SEK 20,553m vs SEK 15,871m (up 29.5%)
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Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025):SEK 1,389m vs SEK 957m (up 45.1%)
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Basic EPS (Q3 2026 vs Q3 2025):SEK 2.58 vs SEK 1.78 (up 44.7%)
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EBIT Margin (Q3 2026 vs Q3 2025):9.5% vs 8.7% (margin improvement)
Prefer interactive charts to another dense block of earnings tables and footnotes? See Saab's full visual financial picture, with a clear view of the current valuation against its cash flows and backlog in the company report for Saab.
Evaluating Saab's Backlog Conversion Milestones
The bullish story hangs on Saab turning a huge pipeline into real, profitable output.
"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 points squarely in that direction. Saab logged SEK 65 to 66b of new orders and grew its backlog to SEK 364b, with about SEK 102b planned to convert next year. EBIT margin stepped up to 9.5%, while cash conversion reached 77%, helped by advances on programs like Polish submarines and GlobalEye. Aeronautics still absorbs T 7 losses, yet group profitability and cash generation show early evidence that scaling is taking hold rather than stalling on bottlenecks.
Not everyone reads the same price the same way. → See the lower figure this Narrative lands on, and how it gets there .
Saab's Q3 Shows Progress, But Profit Drags Linger
Bears argue Saab's heavier exposure to complex, open book platforms and subscale programs could quietly bleed profitability even as orders hit records.
"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 Aeronautics EBIT margin of 6.8% with T 7 drag slightly above SEK 100m per quarter, plus lower Naval margin from R&D and start up costs, shows these headwinds are still present. Strong group EBIT and 77% cash conversion help, but the profit dilution from subscale work and bid write downs has not cleared yet.
Hunt For Mispriced Cash Flows
Saab reports solid progress that raises questions about how its valuation reflects current cash flows. The real opportunity sits in stocks that could be undervalued before the market resets the gap.
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Company 1 - 44% below our estimate - turns demand for seabed mapping, security monitoring and asset tracking into higher volumes for oceans, connectivity and industrial sensing solutions.
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Company 2 - 36% below our estimate - grows beyond classic M&A advice as clients select its expanding capital markets and private capital teams for more complex mandates.
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Company 3 - 41% below our estimate - scales mortgage, housing and insurance platforms so higher transaction volumes can lift profitability on largely fixed infrastructure.
Those are three of them. See all 192 potentially undervalued companies →
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SAAB-B.ST .
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