Key Points
Booz Allen reported Q1 2027 financial results before the market opened today.
Shares of Booz Allen are trading at a discount to their historical valuation.
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Ending the week on a bullish note, shares of defense contractor Booz Allen Hamilton (NYSE: BAH) ripped higher today after the defense contractor reported strong first-quarter 2027 financial results and fiscal 2027 guidance before the opening bell rang.
Shares of Booz Allen climbed 10.1% today, paring back an earlier gain of 15.7%.
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Beating analysts' expectations on the bottom line isn't the only thing investors are celebrating
Coming up just short of analysts' top-line estimates of $2.81 billion, Booz Allen reported Q1 sales of $2.8 billion. At the bottom of the income statement, however, Booz Allen crushed expectations, reporting adjusted earnings per share (EPS) of $1.81 -- notably higher than the $1.49 that analysts had anticipated.
On the cash flow statement, investors found another sign of the company's strong recent performance. During the first quarter of 2027, Booz Allen generated free cash flow of $261 million, a year-over-year increase of 172%.
In addition to the Q1 2027 financial results, Booz Allen provided 2027 revenue guidance of $11.2 billion to $11.7 billion, as well as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance of $1.24 billion to $1.29 billion. Should the company achieve the midpoints of both of these metrics, it will represent year-over-year revenue and adjusted EBITDA growth of 2.2% and 2.8%, respectively.
Booz Allen stock is sitting in the bargain bin
Trading at 7 times operating cash flow, Booz Allen shares are trading at a steep discount to their five-year average cash flow multiple of 16. Between the stock's attractive price tag, the company's strong Q1 2027 financial performance, and management's encouraging outlook for the remainder of the fiscal year, investors seeking a leading defense stock would be well-served to consider Booz Allen stock right now.
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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Booz Allen Hamilton. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
