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Booz Allen (BAH) Up 14.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Booz Allen Hamilton (BAH - Free Report) . Shares have added about 14.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Booz Allen due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Booz Allen Beats on Earnings in Q1

Booz Allen reported mixed first-quarter fiscal 2021 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same.

Adjusted earnings per share of 93 cents beat the consensus mark by 6.9% and improved 12% on a year-over-year basis. The bottom line benefited from top-line growth, strong contract-level performance and operational management.

Revenues, Backlog & Headcount Increase Y/Y

Total revenues of $1.96 billion lagged the Zacks Consensus Estimate by a slight margin and increased 7.1% year over year. Revenues, excluding billable expenses, were $1.41 billion, increasing 10.5% on a year-over-year basis. Billable expenses accounted for 28.1% of revenues.

Total backlog increased 15.9% from the prior-year quarter’s reported figure to $23 billion. Funded backlog of $3.44 billion increased 7.6% year over year. Unfunded backlog was up 8.8% to $4.73 billion. Priced options went up 4.9% to $12.8 billion. Book-to-bill ratio was 2.17, up 68.2% year over year. Headcount of 27,381 increased 3.8% year over year.

Operating Results

Adjusted EBITDA amounted to $213 million, up 6.8% year over year. Adjusted EBITDA margin on revenues stayed flat year over year at 10.9%. Adjusted EBITDA margin on revenues, excluding billable expenses, decreased to 15.1% from 15.6% in the year-ago quarter.

Balance Sheet & Cash Flow

Booz Allen Hamilton exited fiscal first quarter with cash and cash equivalents of $620.6 million compared with $450.8 million at the end of the prior quarter. Long-term debt (net of current portion) was $2 billion, roughly flat with the previous quarter. The company generated $140.4 million of net cash from operating activities. Capital expenditure was $20.1 million and free cash flow was $120.4 million for the March-end quarter.

The company paid out dividends worth $43.8 million and repurchased shares worth $85.9 million in the reported quarter.

 Fiscal 2021 Outlook

The company’s revenue-growth projection is 6-10%. The adjusted earnings per share guidance is $3.40-$3.60. The midpoint ($3.50) of the guided range is below the Zacks Consensus Estimate of $3.59.

Adjusted EBITDA margin on revenues is anticipated to be 10%. Operating cash flow is expected in the range of $550-$600 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

At this time, Booz Allen has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Booz Allen has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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