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Should Value Investors Buy Booz Allen Hamilton (BAH) Stock?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Booz Allen Hamilton (BAH). BAH is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 16.41. This compares to its industry's average Forward P/E of 16.84. Over the last 12 months, BAH's Forward P/E has been as high as 20.35 and as low as 15.39, with a median of 17.88.

Investors will also notice that BAH has a PEG ratio of 1.14. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BAH's PEG compares to its industry's average PEG of 1.32. Over the past 52 weeks, BAH's PEG has been as high as 2.20 and as low as 1.07, with a median of 1.60.

Finally, investors should note that BAH has a P/CF ratio of 15.58. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 16.73. BAH's P/CF has been as high as 18.49 and as low as 14.51, with a median of 16.31, all within the past year.

These are just a handful of the figures considered in Booz Allen Hamilton's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that BAH is an impressive value stock right now.


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