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Give 'em a hand, folks. American Science & Engineering (Nasdaq: ASEI) has done it again. Coming off a "miraculous" fiscal third quarter that saw revenues climb 53% and profits leap 163%, AS&E reported the following news last week:

• Revenues grew 36% over last year, and profits more than tripled to $0.92 in fiscal Q4 ...
• ... helping AS&E close out the year with 31% revenue growth and 42.6% gross margins, considerably better than X-ray rivals L-3 (NYSE: LLL) and OSI Systems (Nasdaq: OSIS) earn. Better too than General Electric (NYSE: GE), which recently announced it's getting out of the bomb sniffin' biz.
• Better margins on higher revenues naturally boosted the bottom line -- to $3.18 per share, up 70% from fiscal 2008.
• Last but not least, free cash flow came a-gushin', with cash profit surging 135% for the year (and for the record, that number was 16% ahead of reported net income).

And yet, despite all the grand news, this Motley Fool Rule Breakers recommendation ended the week down from its pre-earnings price. Why?

Valuation
That's been a concern before, but not anymore. Analysts expect a 15% pace of profits growth and the firm produced $33 million in free cash flow produced last year. A quick valuation assuming 15% growth over the next five years and no growth what-so-ever after that puts the firm at $500 million or thereabouts. Yet the stock trades just 10% above that sum, and the enterprise value is about 15% below it. So basically, AS&E looks fairly priced right now.

Backlog concerns?
Nope. AS&E booked more than $59 million in new business in Q4, replacing every dollar's worth of orders fulfilled with new orders received -- and a little bit more. AS&E ended fiscal 2009 with $155.3 million in backlogged work, a 56% increase over the year-ago number.

Moreover, last week, several defense industry heavyweights were polled on what they thought the Obama administration would do to their businesses. The verdict was pretty much unanimous, as firms like General Dynamics (NYSE: GD) and Northrop Grumman (NYSE: NOC) agreed that what funds the government took away with one hand, it tended to give back with another. Or as Rockwell Collins (NYSE: COL) put it: "Almost in every case where we see programs that move away, we can move on to other programs."

Foolish takeaway
Things could turn out even better for AS&E. As I argued last month, the Obama administration seems more likely to increase than decrease funding for port and airport security -- AS&E's forte -- and the sales and backlog trends seem to be backing this up. In short, I see no good reason for AS&E's stock to be ebbing today. To the contrary, this one should be at high tide.