Government contractor and NYSE newcomer SAIC (NYSE:SAI) reports its third set of earnings numbers as a public company tomorrow, when it releases its news on fiscal Q1 2008. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? Fifteen analysts follow SAIC. The stock still has one sell rating and 14 holds.
  • Revenue. On average, they're looking for 6% revenue growth, to $2.08 billion.
  • Earnings. Profits are predicted to fall 26% to $0.20 per share.

What management says:
The big news at SAIC since last year's strong earnings report came out has concerned a spate of executive departures. First, SAIC Group President George Singley announced his retirement in April. Then, Enterprise and Infrastructure Solutions Group President Larry Peck announced he is stepping down from that post (but will remain with the company). Finally, late last month, SAIC Executive VP William Roper announced he is resigning to take on the CEO's job at VeriSign (NASDAQ:VRSN).

Worrisome developments? Perhaps, if the company was flailing -- but it's not, as shown in its fiscal Q4 and full-year 2007 earnings report, discussed here.

What management does:
Last quarter's revenue was greater than anticipated, and its net losses (exacerbated by higher taxes) less than feared. That said, the firm did see both rolling gross and net margins erode, while progress with operating margin halted its steady upward march.

Margin

10/05

1/06

4/06

7/06

10/06

1/07

Gross

13%

12.6%

13%

13.2%

13.6%

13.4%

Operating

6.1%

6.2%

6.7%

6.8%

7.1%

7.1%

Net

11.9%

11.9%

5.7%

5.7%

5.7%

4.7%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Reviewing the most recent trends in margins, though, I don't see much to worry about. Over the last two reporting quarters, sales were up 8%, cost of services provided up only 7%, and selling, general, and administrative costs up just 5%. Looks to me like the margins should start moving upward again shortly, if SAIC just keeps doing what it's been doing.

Unsurprisingly, management agrees that things are going just fine. In last quarter's report, previous guidance for fiscal 2008 was reaffirmed at $8.7 billion to $9 billion in revenue, and $370 million or more in free cash flow.

Want to learn more about SAIC? Get the word straight from the horse's mouth (no offense intended) -- the Fool's own Alex Dumortier interviewed Titan (now L-3 (NYSE:LLL)) alum and current SAIC CFO Mark Sopp early last month. You can read the complete interview for free when you sign up for a free trial subscription to Motley Fool Inside Value.

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.