Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Orbital Sciences Corp. (NYSE:OA) missed estimates by $0.02 on Thursday, hardly the kind of news you'd expect to spark a 5.2% rally in its stock -- yet that's exactly what shareholders were treated to last week. Despite reporting a $0.23 per share profit when analysts expected $0.25, Orbital Sciences shares surged Thursday. Why?

Reporting earnings for its first fiscal quarter 2014, Orbital revealed that quarterly sales slid 3% to $323 million, operating profit margins declined by 220 basis points, to 7.1%, and net income was down by a dime -- a 30% decrease to $0.23 per share.

That all sounds like pretty bad news -- but it wasn't all the news Orbital had to report. On the plus side, while Orbital's earnings plunged to just $14 million, as calculated under GAAP earnings standards, actual cash profits at the company surged to $87 million -- setting a new quarterly record for the company. From a free cash flow perspective, Orbital is now generating cash at an annual rate of $128 million -- more than twice reported GAAP "profits".

With profits expected to grow 16% annually over the next five years, this would appear to make Orbital shares look very attractively priced at a valuation of 26 times earnings -- but less than 13 times free cash flow. Adding to the attractiveness, Orbital's balance sheet shows the company flush with $350 million in cash, against only $140 million in debt.

Brighter horizons
Quarterly quirks notwithstanding, Orbital's superb performance in cash production also led the company to up its estimate for this year's free cash flow production. Orbital expects free cash flow for fiscal 2014 to run anywhere from $130 million-$150 million. That will be not only an improvement over the company's trailing numbers. It's also an improvement over Orbital's previous guidance for the year.

And as for GAAP financials, Orbital is holding firm on its initial projections. Despite the Q1 disappointment, management still believes it will generate as much as $1.5 billion in revenues this year, earn about a 7.5% operating profit margin thereon, and earn anywhere from $1.10-$1.20 per share, GAAP.

And an even brighter future, farther out
Looking beyond 2014, prospects seem similarly bright. Orbital Sciences added nearly $500 million worth of "new firm and option contract bookings" and "option exercises" in Q1. Backlog of work to be done in the future now stands at $2.3 billion, or $4.8 billion if you count less certain "options, indefinite-quantity contracts, and undefinitized orders." Put another way, the company has about a year and a half's worth of future revenues in the bag, and potentially enough work -- even if it wins no new contracts -- to keep it working full-tilt for the next three straight years.

Long story short, Orbital's future looks bright -- and at 13 times free cash flow, its valuation looks right. 

Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Orbital Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.