Key Points
Amentum missed on Q1 sales but beat on earnings this morning.
The nuclear engineering firm forecasts a return to sales growth later in the year.
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Chantilly, Va.-based engineering firm Amentum Holdings (NYSE: AMTM) stock tumbled 9.6% through 10:15 a.m. ET Tuesday after reporting mixed results in its Q1 2026 earnings report this morning.
Heading into the report, analysts forecast Amentum would earn $0.52 per share on $3.3 billion in quarterly sales. Amentum beat the earnings forecast with a $0.52 profit, but missed on sales, reporting just over $3.2 billion.
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Amentum Q1 earnings
Sales declined 5% in the company's first fiscal quarter of the new year. Profit margins improved significantly, however, helping Amentum turn that sales decline into a 5% improvement in operating income and a 260% increase in profits per diluted share.
Amentum may not have earned "$0.52" -- that number was non-GAAP, unfortunately. But it did earn $0.18 per share, calculated under generally accepted accounting principles (GAAP), more than three times last year's Q1 profit of $0.05.
That said, free cash flow for the quarter ran negative, with Amentum burning $142 million in cash.
Is Amentum stock a buy?
Amentum predicts a return to sales growth later in the year, forecasting full-year sales as high as $14.3 billion (3% growth year over year), with adjusted earnings growing perhaps 12% to $2.35 per share (plus or minus $0.10) and free cash flow of about $550 million (also 12% growth). The company highlighted nuclear power contract wins in France, the Netherlands, and the United Kingdom as contributing to its growth.
At $12.6 billion in enterprise value, this implies about a 23x EV-to-FCF ratio on the stock. That seems a bit rich to me in light of the company's own guidance for only 12% growth. I'd call Amentum stock a "sell" at this price.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amentum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
