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Booz Allen Hamilton (BAH) Gains But Lags Market: What You Should Know

Zacks Equity Research

Booz Allen Hamilton (BAH) closed at $70.79 in the latest trading session, marking a +0.01% move from the prior day. This move lagged the S&P 500's daily gain of 3.15%. Elsewhere, the Dow gained 3.85%, while the tech-heavy Nasdaq added 2.44%.

Prior to today's trading, shares of the defense contractor had lost 6.51% over the past month. This has lagged the Business Services sector's gain of 2.24% and the S&P 500's gain of 0.38% in that time.

Wall Street will be looking for positivity from BAH as it approaches its next earnings report date. This is expected to be May 26, 2020. In that report, analysts expect BAH to post earnings of $0.70 per share. This would mark year-over-year growth of 9.38%. Our most recent consensus estimate is calling for quarterly revenue of $1.94 billion, up 9.01% from the year-ago period.

Any recent changes to analyst estimates for BAH should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. BAH is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, BAH is currently trading at a Forward P/E ratio of 20.58. Its industry sports an average Forward P/E of 20.33, so we one might conclude that BAH is trading at a premium comparatively.

Also, we should mention that BAH has a PEG ratio of 1.72. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Government Services stocks are, on average, holding a PEG ratio of 1.58 based on yesterday's closing prices.

The Government Services industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 179, which puts it in the bottom 30% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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