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Booz Allen Hamilton Hits 52-Week High: What's Driving It?

Zacks Equity Research

Shares of Booz Allen Hamilton Holding Corporation BAH scaled a new 52-week high of $57.12 during the trading session on Mar 18, before closing a tad lower at $57.09.

Shares of the company have charted a solid trajectory in recent times, appreciating over 47.2% in the past year, outperforming the 28% rise of the industry it belongs to and a 4.4% gain of the Zacks S&P 500 composite.

Notably, the company has witnessed a 10.7% rise in share price since it posted strong third-quarter fiscal 2019 results.

Let’s find out what’s supporting the rally.

Vision 2020: A Strategic Business Move

Booz Allen is currently executing Vision 2020 — a strategy focused 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 as well as expanding into commercial and international businesses. The company is seeing higher backlog growth, a shift in talent to more technical expertise and strong performance in the global commercial market.

Differentiated Business Model & Innovative Fields

Booz Allen has created diverse business models and sales channels to increase client acquisition. It diversified itself in the talent market to ensure attraction and retention of quality talent from various disciplines. These moves have enabled it to significantly expand offerings. Also, increased focus on innovation areas such as machine intelligence and directed energy is helping the company receive contracts for highly technical and mission-critical work.

Dividend Hike

Concurrent with the third-quarter fiscal 2019 earnings release, Booz Allen announced a dividend hike of 4%, thereby raising the quarterly cash dividend to 23 cents per share. In the first nine months of fiscal 2019, the company paid $81.8 million in dividends and repurchased shares worth $181.4 million.

Upbeat Fiscal 2019 View

Booz Allen raised its fiscal 2019 guidance for adjusted earnings, revenues and adjusted EBITA margin on revenues.

Adjusted earnings are expected in the range of $2.65-$2.75 per share compared with $2.55-$2.65 guided earlier. The company expects revenues to register 7-8% growth compared with the previous expectation of 6-8%. Adjusted EBITDA margin on revenues is anticipated in the 10-10.5% band compared with 10% as expected previously.

Zacks Rank and Other Key Picks

Currently, Booz Allen has a Zacks Rank #2 (Buy). Some other similar-ranked stocks in the broader Zacks Business Services sector are Interpublic IPG, Omnicom OMC and Paychex PAYX, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected EPS (three to five years) growth rate for Interpublic, Omnicom and Paychex is 2.7%, 4.7% and 8.8%, respectively.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.