Booz Allen (BAH) Stock Up 21.4% Year to Date: Here's Why

Shares of Booz Allen Hamilton Holding Corporation BAH have gained 21.4% so far this year, outperforming 11.4% growth of the industry it belongs to.


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

Consecutive Earnings & Revenue Beat

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

Vision 2020 Bodes Well

Booz Allen is currently in the process of implementing Vision 2020, a strategy aimed at countering competition and achieving sustainable 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 expanding into commercial and international businesses. Through implementation of Vision 2020, Booz Allen is seeing significantly higher backlog growth, a shift in talent to more technical expertise, strong organic-revenue growth, boost in profitability, and margin expansion.

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 future revenue opportunities. The company also differentiated itself in the talent market so as to attract and 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 for the company.

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, ICF International ICFI and CoreLogic CLGX, 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, ICF International and CoreLogic is 6.6%, 10% and 12%, respectively.

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