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Reasons to Retain Booz Allen Hamilton (BAH) in Your Portfolio

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Booz Allen Hamilton Holding Corporation (BAH - Free Report) is benefiting from Vision 2020, its transformation strategy for creating sustainable expansion.

The company has an expected long-term (three to five years) EPS growth rate of 10.6%. Its earnings for 2021 and 2022 are anticipated to grow 6.7% and 9.9% respectively, year over year.

Factors that Bode Well

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.

Booz Allen has a large addressable market as it serves the U.S. government, which is one of the world’s largest consumers of technology and management consulting services. Further, the company has a lot of opportunities in global commercial markets where it has relatively low penetration.

Debt Woe Stays

Booz Allen's cash and cash equivalent balance of $991 million at the end of fourth-quarter fiscal 2021 was well below the long-term debt of $2.3 billion, underscoring that the company does not have enough cash to meet this debt burden. However, the cash level can meet the short-term debt of $78 million.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the broader Zacks Business Services sector includes Equifax Inc. (EFX - Free Report) , Cross Country Healthcare (CCRN - Free Report)  and Charles River Associates (CRAI - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for Equifax, Cross Country Healthcare and Charles River is pegged at 14%, 10.5% and 15.5%, respectively.

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