Reasons to Retain Booz Allen Hamilton (BAH) in Your Portfolio
Booz Allen Hamilton Holding Corporation BAH has had an impressive run over the past six months. The stock has gained 19.2%, outperforming the 12.5% rise of the industry it belongs to and the 4.9% growth of the Zacks S&P 500 composite.
BAH has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Booz Allen Hamilton Holding Corporation Price
Booz Allen Hamilton Holding Corporation price | Booz Allen Hamilton Holding Corporation Quote
The company has an expected long-term (three to five years) EPS growth rate of 12%. Its earnings for fiscal 2024 and 2025 are anticipated to grow 10.1% and 9.9%, respectively, year over year. The company’s revenues for fiscal 2024 and 2025 are expected to grow 13% and 5.8%, respectively, year over year.
Factors That Bode Well
Booz Allen has developed its solutions business in a way that creates differentiated business models and sales channels, increases client acquisition and enhances future revenue opportunities. The company also differentiated itself in the talent market to ensure attraction and retention of quality talent from diverse disciplines.
These initiatives bumped up 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 sustainable growth for the company. Its revenues increased 16% year over year in the second quarter of fiscal 2024 and we expect them to increase 9.8% in the next quarter.
Vision 2020 was Booz Allen’s transformation strategy for creating sustainable expansion. The strategy focused on getting closer to clients’ core missions, increasing the 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 expanding into commercial and international business.
Its implementation has accelerated the company’s organic revenue growth, strengthened its profitability position and fetched significant headcount and backlog growth. Its adjusted operating income increased 2.1% year over year in the second quarter of fiscal 2024 and we expect it to increase 17.2% in the next quarter.
Booz Allen’s next strategy, VoLT focuses on integrating velocity, leadership and technology in the process of transformation. Key focus areas on the velocity front are increasing innovation, strengthening market position through mergers, acquisitions and partnerships and client-centric decision-making. The leadership front involves initiatives to promptly utilize leadership in identifying client needs and scaling businesses. On the technology front, the company focuses on developing and expanding next-generation technology and solutions.
A Risk
Capital expenditure has been increasing as Booz Allen increases investments in facilities, systems, infrastructure and technology to support long-term growth. The company’s capital expenditure for the second quarter of fiscal 2024 increased 61% sequentially. We expect a 70% sequential increase in the third quarter of fiscal 2024.
Zacks Rank and Stocks to Consider
Booz Allen currently carries a Zacks Rank #3 (Hold).
Investors can consider the following better-ranked stocks:
Rollins ROL currently carries a Zacks Rank #2 (Buy). For the fourth quarter of 2023, the Zacks Consensus Estimate for earnings is pegged at 20 cents, indicating year-over-year growth of 17.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ROL has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and matching once, the average surprise being 7.2%.
FTI Consulting FCN also carries a Zacks Rank of 2. The consensus mark for fourth-quarter 2023 earnings is pegged at $1.57 per share, indicating 3.3% year-over-year growth.
FCN has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and missing once, the average surprise being 8.5%.
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