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Booz Allen's (BAH) Stock Down 2% Despite Q3 Earnings Beat

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Zacks Equity Research
·4 min read
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Booz Allen Hamilton Holding Corp. BAH reported mixed third-quarter fiscal 2021 results with earnings beating the Zacks Consensus Estimate but revenues missing the same.

It seems that the better-than-expected bottom line number failed to impress the market as the stock declined 2% since the earnings release on Jan 29. Over the past year, the stock has gained 6.3%, outperforming the 4% rally of the industry it belongs to.

Quarterly adjusted earnings per share of $1.04 beat the consensus mark by 13% and improved 30% on a year-over-year basis. The bottom line benefited from solid top-line growth and strong margin performance.

Revenues, Backlog & Headcount Increase Y/Y

Total revenues of $1.9 billion lagged the Zacks Consensus Estimate by 4.7% but increased 3% year over year. Revenues, excluding billable expenses, were $1.33 billion, increasing 6.2% on a year-over-year basis. Billable expenses accounted for 30.3% of revenues.

Total backlog increased 6.1% from the prior-year quarter’s reported figure to $23.3 billion. Funded backlog of $3.6 billion increased 2.8% year over year. Unfunded backlog was up 12.5% to $6 billion. Priced options went up 4.3% to $13.7 billion. Book-to-bill ratio was 0.32, down 33.3% year over year. Headcount of 27,566 increased 1.5% year over year.

Operating Results

Adjusted EBITDA amounted to $205.4 million, up 7.7% year over year. Adjusted EBITDA margin on revenues was 10.8%, up from the year-ago figure of 10.3%. Adjusted EBITDA margin on revenues, excluding billable expenses, increased to 15.5% from 15.3% in the year-ago quarter.

Balance Sheet & Cash Flow

Booz Allen Hamilton exited the quarter with cash and cash equivalents of $1.34 billion compared with $1.28 billion at the end of the prior quarter. Long-term debt (net of current portion) was $2.3 billion, flat with the prior-quarter figure. The company generated $232.9 million of net cash from operating activities. Capital expenditure was $15.9 million and free cash flow was $217 million.

The company paid out dividends worth $43 million and repurchased shares worth $27 million in the reported quarter.

Revised Fiscal 2021 Outlook

Adjusted EPS is anticipated to be in the range of $3.7-$3.85,  compared with the previous guidance of $3.6-3.75. The midpoint ($3.78) of the guided range is above the Zacks Consensus Estimate of $3.77. The company’s revenue-growth projection is now at 4.8-6% range compared with the previous projection of 7-9%.

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.

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.

Performance of Other Business Services Companies

Rollins’ ROL fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and improved 6% year-over-year.

IHS Markit’s INFO fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Esimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter on a reported basis.

Automatic Data Processing’s ADP second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year.

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