Booz Allen Hamilton Holding Corporation (BAH - Free Report) has an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth.
The company has an expected long-term earnings per share (three to five years) growth rate of 11.9%. Further, earnings are anticipated to register 13.7% growth in fiscal 2020 and 9.6% in fiscal 2021.
Shares of Booz Allen have gained 16.9% in the past year compared with the industry’s growth of 5.3%.
Factors That Bode Well
Booz Allen is currently in the process of implementing Vision 2020. Through this strategy, the company has moved closer to clients’ core missions, expanded and diversified its talent base as well as improved employee experience. Booz Allen is seeing backlog growth, enhanced technical expertise and a strong performance in the global commercial market. The company is thoroughly into creating differentiated business models, increasing client acquisition and enhancing future revenue opportunities.
On the verge to combat COVID-19, Booz Allen has unveiled a resilience program of more than $100 million to support its employees and their surrounding communities through a pandemic. The program aims at enabling the company’s employees to continue working with government and commercial clients, while taking care of themselves and their families. It includes major benefit program enhancements for employees tackling health, childcare and coronavirus-related problems. It also incorporates the company’s commitment towards job security at least through Jul 1, provision of funding as well as assistance and technology support to veterans, military families and frontline healthcare workers.
Booz Allen’s revenues and margins are expected to be under pressure in the upcoming quarters due to impact of the coronavirus crisis.
The company has a debt ridden balance sheet. As of Dec 31, 2019, long-term debt was $2 billion while cash and cash equivalents were $696.8 million. This indicates that that the company needs to generate adequate amount of operating cash flow to service its debt. Moreover, high debt may put pressure on its future expansion and worsen its risk profile.
Zacks Rank and Stocks to Consider
Booz Allen currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks to consider in the broader Zacks Business Services sector are CoreLogic, Inc. (CLGX - Free Report) , SPS Commerce, Inc. (SPSC - Free Report) and SailPoint Technologies Holdings, Inc. (SAIL - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for CoreLogic, SPS Commerce and SailPoint is at 12%, 15% and 15%, respectively.
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