Shares of Booz Allen Hamilton Holding Corporation BAH have gained 16.6% over the past year, outperforming the 5.8% growth of the industry it belongs to.
Let’s delve deeper into factors that have contributed to the company’s price performance.
Consecutive Earnings &Revenue Beat
Booz Allen came up with better-than-expected earnings and revenue performance in the past four quarters. While the company’s bottom line benefited from top-line growth, strong contract-level performance and operational management, the top line was aided by sustained demand for the company’s services and solutions, and rise in headcount to meet that demand.
Vision 2020 Bodes Well
Booz Allen is currently in the process of implementing Vision 2020, a strategy aimed at countering competition and achieving sustainable growth. The strategy focuses on getting closer to clients’ core missions, increasing technical content of work, attracting and retaining talent from diverse areas of expertise, increasing innovation, creating a wide network of external partners and alliances, and expansion into commercial and international business. Through implementation of Vision 2020, Booz Allen is seeing significantly higher backlog growth, a shift in talent to more technical expertise, strong organic revenue growth, boost in profitability, and margin expansion.
Differentiated Business Model
Booz Allen has developed its solutions business in a way that it creates differentiated business models and sales channels, increases client acquisition and enhances future revenue opportunities. The company also differentiated itself in the talent market so as to attract clients and to retain quality talent from diverse disciplines. These initiatives have enhanced its ability to bring a variety of offerings through which it has been winning highly technical, mission-critical work for its federal government business. All these ensure long-term growth for the company.
Zacks Rank and Stocks to Consider
Booz Allen Hamilton currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are DocuSign DOCU, SailPoint Technologies Holdings, Inc. SAIL and ManpowerGroup MAN. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for DocuSign, SailPoint and ManpowerGroup is 31.2%, 15% and 15%, respectively.
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