Booz Allen Hamilton Holding Corporation’s BAH strong reputation, recurring government contracts, focus on innovation, and shareholder returns attract investors.

Let’s see in detail what makes BAH an attractive pick

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, 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: Six estimates for fiscal 2025 have moved north in the past 30 days versus no southward revision. The Zacks Consensus Estimate for fiscal 2025 earnings has moved up 2.4% 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 6.7% on average.

Strong Growth Prospects: The Zacks Consensus Estimate for BAH’s fiscal 2025 earnings is pegged at $6.42, implying 16.7% year-over-year growth. Moreover, earnings are expected to register an 8.2% 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

Some other top-ranked stocks are Coinbase Global COIN and ABM Industries ABM.

Coinbase flaunts a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

COIN has a long-term earnings growth expectation of 3%. It delivered a trailing four-quarter earnings surprise of 46.2%, on average.

ABM Industries carries a Zacks Rank of 2 at present. ABM has a long-term earnings growth expectation of 5.2%. It delivered a trailing four-quarter earnings surprise of 11.6%, on average.

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ABM Industries Incorporated (ABM) : Free Stock Analysis Report

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

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This article originally published on Zacks Investment Research (zacks.com).

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