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Booz Allen (BAH) Stock Rallies 39.1% in a Year: Here's Why

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  • BAH

Shares of Booz Allen Hamilton Holding Corporation BAH have gained 39.1% over the past year.

Let’s delve deeper into the 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 five of the past seven quarters. While the company’s bottom line benefited from top-line growth, strong contract-level performance and operational management, revenues were aided by sustained demand for the company’s services and solutions, and rise in headcount to meet that demand.

Raised Fiscal 2021 Guidance

Booz Allen has raised its full-year fiscal 2021 guidance on adjusted EPS, adjusted EBITDA margin on revenues and cash from operating activities.

Adjusted EPS is now anticipated to be in the range of $3.7-$3.85 compared with the previous guidance of $3.6-3.75. Adjusted EBITDA margin on revenues is anticipated to be in mid-to-high 10% range compared with low-to-mid 10% range projected previously. Operating cash flow is expected in the range of $625-$675 million while the previous projection was $600-$650 million.

Differentiated Business Model & Innovative Approaches

Booz Allen has developed its solutions business in a way that it creates differentiated business models and sales channels, increases client acquisition, and enhances revenue opportunities. The company also differentiates itself in the talent market so as to attract and retain quality talent from diverse disciplines. These initiatives have enhanced its ability to bring a variety of offerings to the table, which have helped it win highly technical, mission-critical work for federal government business. All these ensure long-term growth.

The company is also focusing on areas such as artificial intelligence, advanced engineering, directed energy and modern digital platforms, to drive innovation. It is developing mechanics and infrastructure for new and disruptive business models, which can enhance service quality and client satisfaction. Transformative solutions created by such efforts are expected to significantly enhance future revenue opportunities.

Zacks Rank and Stocks to Consider

Booz Allen Hamilton currently carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Servicessector are Interpublic IPG, Omnicom OMC and Gartner IT each carrying a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for Interpublic, Omnicom and Gartner is 2.4%, 4.7% and 13.5%, respectively.

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