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Here's Why You Should Retain Booz Allen (BAH) Stock for Now

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Booz Allen Hamilton Holding Corporation (BAH - Free Report) currently benefits from Vision 2020 and a large addressable market. However, a weak balance sheet is worrisome.

BAH has an expected long-term earnings per share (three to five years) growth rate of 7.9%. Further, earnings are anticipated to register growth of 2.6% and 12.6% in 2023 and 2024, respectively.

Factors That Augur Well

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

Booz Allen’s transformation strategy, Vision 2020, aims to create a sustainable expansion, which 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 accelerated BAH’s organic revenue growth and strengthened its profitability position.

BAH also recently announced that it inked a deal to purchase EverWatch, a portfolio company of Enlightenment Capital. EverWatch’s advanced software development and analytics capabilities combined with its skilled workforce should complement Booz Allen’s National Cyber platform.

Shares of Booz Allen have gained 4.2% in the past year against the 4.5% decline of the industry it belongs to.

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A Risk

Booz Allen's current ratio (a measure of liquidity) at the end of fourth-quarter fiscal 2022 was pegged at 1.59, lower than the current ratio of 1.69 reported at the end of third-quarter fiscal 2022 and the prior-year fiscal quarter’s 2.04. Decreasing current ratio is not desirable as it indicates that BAH may have problems meeting its short-term debt obligations.

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 better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. (CAR - Free Report) , Cross Country Healthcare (CCRN - Free Report) and CRA International, Inc. (CRAI - Free Report) .

Avis Budget sports a Zacks Rank #1 at present. CAR has a long-term earnings growth expectation of 19.4%.  

Avis Budget delivered a trailing four-quarter earnings surprise of 102%, on average.  

Cross Country Healthcare flaunts a Zacks Rank of 1 at present. CCRN has a long-term earnings growth expectation of 6.9%.

Cross Country Healthcare delivered a trailing four-quarter earnings surprise of 29.2%, on average.  

CRA International carries a Zacks Rank #2 (Buy), currently. CRAI has a long-term earnings growth expectation of 14.3%.

CRAI delivered a trailing four-quarter earnings surprise of 35.8%, on average.  
 

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