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Booz Allen (BAH) Gaining From Transformation Moves, Debt Ails

Zacks Equity Research
·4-min read

Booz Allen Hamilton Holding Corporation’s BAH shares have gained 7.3% over the past year, outperforming the 5.4% growth of the industry it belongs to. The company is currently benefiting from its transformation and innovation strategies while its balance sheet remains debt-heavy.

Booz Allen recently reported second-quarter fiscal 2021 adjusted earnings per share of $1.26 that beat the Zacks Consensus Estimate by 17.8% and increased 22.3% on a year-over-year basis. Total revenues of $2.1 billion missed the consensus mark by 1.2% but increased 4.3% on a year-over-year basis.

Booz Allen Hamilton Holding Corporation Price

Booz Allen Hamilton Holding Corporation price | Booz Allen Hamilton Holding Corporation Quote

How is Booz Allen Doing?

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 expanding into commercial and international business. Its implementation has accelerated the company’s organic revenue growth and strengthened its profitability position.

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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 differentiates itself in the talent market so as 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.

The company is focusing on areas such as artificial intelligence, advanced engineering, immersive technologies, secure mobility 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.

Booz Allen's cash and cash equivalent balance of $789 million at the end of second-quarter fiscal 2022 was well below the long-term debt level of $2.76 billion, underscoring that the company does not have enough cash to meet this debt burden. The cash level can, however, meet the short-term debt of $68 million.

Zacks Rank and Stocks to Consider

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

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Business Services sector are Avis Budget CAR and Cross Country Healthcare CCRN, both sporting a Zacks Rank #1, and Charles River Associates CRAI, carrying a Zacks Rank #2 (Buy).

Avis Budget has an expected earnings growth rate of 420.6% for the current year. The company has a trailing four-quarter earnings surprise of 76.9%, on average.

Avis Budget’s shares have surged 719.1% in the past year. The company has a long-term earnings growth of 18.8%.

Cross Country Healthcare has an expected earnings growth rate of 447.8% for the current year. The company has a trailing four-quarter earnings surprise of 75%, on average.

Cross Country Healthcare’s shares have surged 201.2% in the past year. The company has a long-term earnings growth of 21.5%.

Charles River Associates has an expected earnings growth rate of 61.2% for the current year. The company has a trailing four-quarter earnings surprise of 51%, on average.

Charles River’s shares have surged 120.2% in the past year. The company has a long-term earnings growth of 15.5%.


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Charles River Associates (CRAI) : Free Stock Analysis Report

Avis Budget Group, Inc. (CAR) : Free Stock Analysis Report

Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report

Cross Country Healthcare, Inc. (CCRN) : Free Stock Analysis Report

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Zacks Investment Research