Booz Allen (BAH) Stock Up 13.9% Year to Date: Here's Why

Shares of Booz Allen Hamilton Holding Corporation BAH have gained 13.9% so far this year, outperforming 4.9% growth of the industry it belongs to.


Let’s delve into factors that have contributed to the company’s price performance.

Impressive Earnings & Revenue Beat History

Booz Allen came up with better-than-expected earnings in the past six quarters and beat on revenues five times. It missed the consensus revenue estimate in one quarter of the past six. While the company’s bottom line benefited from top-line growth, strong contract-level performance and operational management, revenues were aided by sustained demand for the company’s services and solutions, and rise in headcount to meet that demand.

Vision 2020 Bodes Well

Vision 2020, Booz Allen’s transformation strategy aimed at creating sustainable expansion, has been fetching significant headcount and backlog growth. The strategy focuses 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, and expansion into commercial and international business. Its implementation has accelerated the company’s organic-revenue growth and strengthened its profitability position. Notably, the company’s adjusted EPS of 93 cents jumped 12% year over year in the last-reported quarter. Revenues, backlog and headcount rose 7.1%, 15.9% and 3.8%, respectively.

Innovative Approaches

Booz Allen is focusing on areas such as artificial intelligence, advanced engineering, directed energy and modern digital platforms to drive innovation. It is developing mechanics and infrastructure for new and disruptive business models to enhance service quality and client satisfaction. Transformative solutions created by such efforts are expected to significantly enhance future revenue opportunities of the company.

Differentiated Business Model

Booz Allen has developed its solutions business in a way that it creates differentiated business models and sales channels, increases client acquisition and enhances revenue opportunities. The company also differentiated itself in the talent market so as to ensure attraction and to retain quality talent from diverse disciplines. These initiatives have enhanced 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 growth.

Zacks Rank and Stocks to Consider

Booz Allen Hamilton currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Republic Services RSG, CoreLogic CLGX and TransUnion TRU, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected earnings per share (three to five years) growth rate for Republic Services, CoreLogic and TransUnion is 7.9%, 12% and 14%, respectively.

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