Last week was an eventful one for owners of SAIC (NYSE:SAIC) stock. As the week began, this IT contractor's stock was trading north of $53 per share, and at one of its highest valuations since March. But SAIC stock fell as much as 10% in response to a disappointing earnings report Tuesday. It then rebounded through Thursday, recovering much of the ground lost, before sinking back below $51 -- down 5% from before earnings -- as the week drew to a close.

And now, with things finally settling down a bit, it's time to pause and reflect: Who was right about SAIC stock last week? The folks who panicked and sold, or those who rushed in to grab the rebound?

The quarter that was
It all depends on how you look at the results. Last week, SAIC reported $1 billion in fiscal Q1 2016 revenues, a bit ahead of expectations; $0.69 per share in diluted earnings, $0.06 short of predictions at Zacks Investment Research; and $28 million in free cash flow, $5 million below reported net income, but $1 million more than the company generated in the year-ago quarter.

According to S&P Capital IQ data, backlog was essentially unchanged from last quarter at $6.2 billion, and SAIC brought in enough new business to replace all revenues booked in the quarter, saying it has a book-to-bill ratio of 1.0.

Thus, the news literally ran the gamut from good (revenues) to bad (earnings) to indifferent (backlog).

So is it a buy or not?
Up 19% over the past year even after last week's slump, SAIC shares have handily outperformed the S&P 500. However, at 17.5 times trailing earnings, but long-term earnings growth estimated at just 6.5% annualized (again, according to S&P Capital IQ), the stock certainly doesn't look like much of a bargain.

On the other hand, free cash flow remains strong. Despite Q1's anemic performance, cash profits generated over the past year come to $256 million, 82% more than what the company is permitted to report as net income" nder generally accepted accounting principles.

Valued on its free cash flow, the stock sells for a valuation of about 9.1. Considering SAIC pays its shareholders a tidy 2.4% income stream from dividends, I'd say SAIC's 6.5% projected profits growth rate is enough to make the stock fairly valued today. But until the company can ramp that growth rate up a bit, it's not a bargain. And considering how flat earnings were in Q1, and how flat the 1.0 book-to-bill ratio looks, SAIC probably won't look like much of a bargain next quarter, either.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.