Booz Allen Hamilton Holding Corporation BAH has performed exceptionally well year to date and has the potential to sustain momentum in the near term. Consequently, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

What Makes BAH an Attractive Pick?

An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run year to date. Shares of Booz Allen Hamilton have returned 21% compared with the 19% rise of the Zacks S&P 500 composite.

Solid Rank and VGM Score: BAH currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.

Northward Estimate Revisions: Five estimates for fiscal 2025 have moved north in the past 30 days versus no southward revision, reflecting analysts’ confidence in the company. The Zacks Consensus Estimate for fiscal 2025 earnings has moved up 3.5% in the past 30 days.

Positive Earnings Surprise History: BAH has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once, delivering an earnings surprise of 11.7% on average.

Strong Growth Prospects: The Zacks Consensus Estimate for BAH’s fiscal 2025 earnings is pegged at $6.16, implying 12% year-over-year growth. Moreover, earnings are expected to register a 11.8% increase in fiscal 2026.

Growth Factors: Decades of delivering mission-critical solutions have cemented Booz Allen’s reputation as a reliable contractor. Government agencies, particularly in defense and intelligence, require high levels of trust and confidentiality, areas where Booz Allen excels. This trust helps the company secure long-term, recurring contracts, allowing it to focus on innovation and efficiency without constantly seeking new clients. 

Multi-year contracts provide a steady revenue stream and reduce the company's exposure to market volatility. Government contracts are often renewed due to the sensitive nature of the services provided, such as defense and cybersecurity consulting, ensuring a consistent business pipeline. Driven by these positives, BAH’s revenues have increased at a compound annual growth rate of 7.4% from fiscal 2020 to fiscal 2024.

Booz Allen's commitment to shareholder returns positions it as a reliable long-term wealth compounder for investors. The company returned $209.1 million, $235.7 million, and $253.4 million through share repurchases in fiscal 2022, 2023, and 2024, respectively, alongside dividend payments of $418.9 million, $223.9 million and $404.1 million over the same period. BAH has a strong balance sheet. Cash and equivalents were $559 million as of Sept 30, 2024 against a current debt of just $83 million. Since the company carries a nominal current debt, most of the cash is available for investments in growth initiatives and distribution to shareholders.

Other Stocks to Consider

A couple of other top-ranked stocks from the broader Zacks Business Services sector are AppLovin APP and Qifu Technology, Inc. QFIN.

AppLovin sports a Zacks Rank of 1  at present. It has a long-term earnings growth expectation of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.

APP delivered a trailing four-quarter earnings surprise of 26.2%, on average.

Qifu Technology sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 14.5%. QFIN delivered a trailing four-quarter earnings surprise of 8.6%, on average.

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

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