Booz Allen Hamilton Holding Corporation (BAH) on Q3 2021 Results - Earnings Call Transcript
Operator: Good morning. Thank you for standing by and welcome to the Booz Allen Hamilton's Earnings Call covering Third Quarter Results for Fiscal Year 2021. At this time, all participants are in a listen-only mode. Later, there will be an opportunity for questions. I would now like to turn the call over to Mr. Rubun Dey. Rubun Dey: Thank you. Good morning and thank you for joining us for Booz Allen's third quarter 2021 earnings announcement. We hope you have had an opportunity to read the press release that we issued earlier this morning. We have also provided presentation slides on our website and are now on Slide 2. Horacio Rozanski: Thank you, Rubun. And good morning, everyone. Thanks for joining the call. Today Lloyd and I will take you through our third quarter results and the dynamics that drove them and we will put the results in the context of the successful culmination of our three-year investment thesis and the strength of our business in the near and long-term. As you saw in our press release, we had a mixed quarter. Our revenue grew more slowly than expected. Conversely, our bottom line results, profit margins and cash flow are excellent and ahead of expectations. Since the beginning of our fiscal year, we have described three macro environmental factors that created uncertainty about our second half; the outcome of election, the status and outlook for the federal budget and the course of the COVID-19 pandemic. Let me talk specifically about how those are playing out on the demand front, on the supply front and the impact on revenue and profits. Underlying demand for our services and solutions remains quite strong. In the third quarter, we saw delays in some procurement in the intelligence market largely due to the pandemic and in the civil market; we saw movement to the right on awards and even some pull back on funding which we believe is due to turmoil surrounding the Presidential election. Lloyd Howell: Thanks Horacio and good morning, everyone. As we approach the end of our 2021 fiscal year, a year of unprecedented challenge, we're proud of how well our people have consistently executed on our clients most important missions. As Horacio mentioned earlier in outlining our 2021 annual operating plan, we identified three major sources of uncertainty. The November election, the budget outlook and the COVID-19 pandemic. After an exceptional top line performance in the first half held by unusually strong staff utilization, we expected slower growth in the second half as PTO trends began to normalize. We also anticipated the potential for a slowdown in award activities following the November Presidential election. We factored these elements into the annual guidance we provided at the end of the second quarter. However, we did not correctly anticipate the timing and magnitude of the top line impact of those dynamics. Our cost management efforts to-date enabled us to hold the lines at adjusted EBITDA. Rubun Dey: Thanks Lloyd. Operator, please open the lines. Operator: our first question comes from Carter Copeland of Melius Research. Your line is open. Carter Copeland: Just two quick ones from me. One of these seems sort of strange to ask, but given the importance on the top line I guess it's important to know how it work. On the PTO impact to the extent, there's unused PTO for the staff on the year and you rolled that forward to next year. I realized you're not guiding for next year yet. But how should we think about, is there an impact of shifting some of that productivity impact into the following year that we should we mindful of as we think about next year's growth? Lloyd Howell: I'll start, Carter. As we said, there were three main reasons for slower growth in Q3 and one of those is definitely tied to lower productivity than what we were running in the first half. If you look at the reasons for that, not only is entire PTO driven by lower available labor. But also lower staff utilization. So we definitely saw a snap back with productivity faster than what we expected. We think as things normalize, it will go back to as we said in our prepared remarks historic levels and we think that will occur over the next couple of quarters. Carter Copeland: Yes, I guess my question is Lloyd. Is there a way for thinking mathematically about it is there a way for to go beyond normalized because you've got built up balances of PTO then suddenly need to get burned down, if you know what I mean? So I guess I'm just asking what normalize mean I suppose. Lloyd Howell: Yes, I mean for the balance of this year. We think its $50 million range and we're not at the moment seeing it any different than what we said or what we're seeing occur for the balance of this fiscal year. Carter Copeland: Okay. And then on the headcount impact of the getting out of the program. The strategic decision to get out of defense program. Can you quantify how big that was? Lloyd Howell: Yes, it impacted about 300 of our folks most of which we redeployed onto other programs in our portfolio. But as we also indicated, we expect that it will continue to grow overtime. With regard to the divestiture that was about 120 people tied in our army account. Carter Copeland: Okay, thanks for the color, Lloyd. Operator: Our next question comes from Jon Raviv of Citi. Your line is open. Jon Raviv: So switching from sales to margin rate, Lloyd just your thoughts on the margin run rate clearly very strong here point higher for the year. Is that a new sort of base off of which you guys could improve this new efforts that you're making in new lines of business or maybe talk about the pressure perhaps as some of this COVID rolls off and people start to travel again and you start to spend all money. Lloyd Howell: Sure so, we're very pleased with our margin performance year-to-date. From our perspective it's a combination of strong execution of the portfolio as well as proven management of discretionary expenses. We didn't get here as you appreciate, overnight. It's been work in progress. But we believe that the things and the dynamics that have contributed to this will remain which is solid contract performance, management among allowable and also as we've made comments in our prepared remarks lower billable expense. Going forward, we're going to continue to invest long-term and in terms of hiring, rewarding our people, the infrastructure improvements that we mentioned and investing in capabilities. So we believe that the mid-to-high 10 range is sustainable and we're going to continue doing things that got us in this position. Horacio Rozanski: Jon, I'll just add couple of quick points. First one is, in some ways the margin percentage can be tied to the volatility of the billable expenses because as you know most of our margin comes from our labor. Having said that, I agree completely with Lloyd that our focus is on EBITDA dollar growth and that has been solid. It's been running ahead of revenue and even revenue its billable growth and that is conservative effort becoming more efficient and we're going to keep on that. Jon Raviv: Thanks very much. Operator: Our next question comes from Cai von Rumohr of Cowen. Your line is open. Cai von Rumohr: To go back to PTO, do you allow employees to carry PTO over from one year to the next or do they use it or lose it? Lloyd Howell: We have a couple of programs, we have a use it or lose it by the end of this fiscal year and then on accrual basis, it sort of grows with the level and seniority of the individual. So portion of it will go away by the end of March. Cai von Rumohr: Got it and then cyber clearly is a priority we had the Russian hack, Biden is basically putting $9 billion to update Federal IT infrastructure. Could you give us some color? I mean you say you're Ranked # 1 by Frost & Sullivan. But obviously you've got - any color you can give us on your business. Therefore example your position in the intel business which isn't covered by Frost & Sullivan. And maybe some metrics like what percent of your employees roughly are involved in cyber. And given the focus, I apologize the long question. How come we have the slip in the cyber program given the increasing priority? Horacio Rozanski: Let me try and start with that. I think Lloyd will probably want to chime in on your multi-part question, Cai. The first thing I would say is, our position in cyber is in fact even stronger in the intelligence community than it is broadly across the government or the commercial sector. The work that we do in intelligence is in some ways the crown jewel. Our cyber programs, we are very bullish on the medium term, long-term outlook for our entire cyber business including commercial which is why and we can talk later about the Tracepoint investment as a part of that. It's actually difficult to break down the specific numbers of how many people do this and how many people do that? Which is why we don't do it because we approach cyber from an all-admission approach. We look at the intersections between cyber and cloud, cyber and AI, cyber and 5G, cyber and intelligence and so forth. On the specific contract that you were asking about, what actually happened is, that contract was actually burning at a faster rate than it was programmed to do because of - frankly because of the increasing the attack surface from so many people in the government working from home and alike and there was an expectation that the last administration would ramp up the funding to keep up with that and the last minute they chose not to do so. We believe that is temporary as you pointed out. The Biden administration is looking to make investments in cyber. We're talking to lot of our clients about the remediation from SolarWinds and so we see a lot of opportunity in that space and we're pursuing that opportunity very aggressively. Cai von Rumohr: Thank you very much. Operator: Our next question comes from Gavin Parsons of Goldman Sachs. Your line is open. Gavin Parsons: I wanted to carry through on the cyber question. But maybe a little bit more on the commercial market. It's always been a little surprising to me that companies haven't utilized yourselves or other government contractors, cyber offerings more given you were the ones who were actually doing cyber for the US government and for the Department of Defense and the intel community presumably you've got some of the best capabilities in the world. So curios if you could talk about that dynamic if you think that nation states sponsored type attacks increase the commercial opportunity and how that could play out? Horacio Rozanski: We do Gavin. I think as we talked about in the prepared remarks, we're actually shifting our global commercial focus more back to the US and much more double down on cyber for this very reason. I think as the adversaries get more sophisticated and as clients get more sophisticated the demand for what we do grows. Quite frankly when we first go into commercial cyber, I think we were so far ahead of many of our clients that it was hard for them to consume, the type of cyber services, cyber capability that we could offer. Our clients are moving very fast or catching up. A lot of them are super sophisticated and so that's why we see significant opportunity and increase in demand. The Tracepoint investment is directly related to our desire to be more involved in incident response. We do a good level of incident response but that is a business that has evolved towards needing to have channel with insurance companies where early players obviously when an incident happens and so forth and Tracepoint does a spectacular job of that and we believe that, their ability to access our channel and our expertise can create real synergies and acceleration. Gavin Parsons: Great, that's helpful. And then just coming up in your three-year plan and they're not guiding. I imagine it's difficult to predict the priorities - or how the priorities of the new administration will play out. What's your anticipation of what budgets will look like over the next few years and what that means for your top line growth relative to the last few years of elevated budget growth? Thanks. Horacio Rozanski: Sure. I think it's trying to predict too far out with the new administration just coming in and everything else is beyond what we should try to do. We are thinking in general that budgets are not going to grow as fast in the next few years as they grew in the last few years and so this is why we continue to invest and double down on these key technologies and capabilities that I talked about before cloud, cyber, AI, 5G because we believe that demand for those types of services will remain strong and in fact accelerate even as the overall budget gets potentially more constrained than it's been in the past and we believe that on two dynamics. One is because you can actually save a lot of money by implementing these technologies right and two, which is we'll focus on so far. You can enhance mission success again some of these very critical missions that. They're not going away if anything are becoming more important. Gavin Parsons: Great. Thank you. Operator: Our next question comes from Tobey Sommer with Truist. Your line is open. Tobey Sommer: Was wondering if you could talk to the hiring plans and sort of reaccelerates your headcount growth and how that may influence continued margin expansions as part of your sort of next three-year plan? Thank you. Lloyd Howell: Sure I'll start. We have always pride ourselves on being a people first business, our employee value proposition plays into that. And we clearly are going to accelerate, pick up the pace from where we ended in Q3. There are couple of reasons we're confident that we're going to get there. The first as I mentioned is our employee value proposition the constant of the work that we provide to our clients. The second, more of a mechanical point, over 30% of our come from our existing workforce. So have familiarity with Booz Allen understand what we're doing and accelerates the recruiting process. This is critically important because the labor market as we often appreciate was very competitive, pre-pandemic and in the midst of COVID as it remained so. So we're going to be even more so on the levers that we've historically done and then also increase the pipeline as I've mentioned. On a margin basis, this investment is going to put a little bit of downward pressure on where we are currently and this is historically what we've done in the fourth quarter anyway, which is really ramping up our people, our bench as we go into the next fiscal year. But even with that being said, we still are confident we're going to end up in the mid-to-high tens with margin. Horacio Rozanski: One other things I just to add - one last thought on this is, that I think is really interesting a good way about the fiscal year that we're about to end. Is we have managed to lower our overall cost position while increasing our investment in people? And I think that tells you how we're thinking about the business, what our priorities are and what we think about for the future. Tobey Sommer: Thank you for that. My second question, could you speak to the most promising areas in the civil business under the Biden administration and discuss how your current portfolio lines up against those and maybe the areas where you have to position yourselves slightly different in order to capitalize on them. Thank you. Horacio Rozanski: Sure. I'll give you maybe a bird eye view on that. The largest part of our civil portfolio has been our health business and it continues to be - we saw during the Obama year significant investment by the country and significant agenda against healthcare access. We expect some version of that to reaccelerate under the Biden administration and that scenario where again I think Booz Allen is in a very good position to assist our clients, should things move in that direction. Our citizen's services business is going to be underpinning the overall digital transformation of our civil government which is also something that's being talked about not just from a cyber perspective but from the ability to move online. Many of the services that we citizens demand and are now expecting to see online. We need to think to step back and think about what role, we think we can play, if there's a significant environment agenda that has - we have a digital play into that. We need to consider whether we need or want a broader play in that area. But that is again under our consideration and as we think about our strategy. These are the kinds of questions we're asking ourselves but I keep coming back. We don't want to underpin all infrastructure, all technology. We want to leverage new technology into some of these areas of expansion and continue to be viewed by all of our clients as the people who insert new technology, new thinking, commercial best practices into their missions. Tobey Sommer: Thank you very much. Operator: Our next question comes from Joseph Denardi of Stifel. Your line is open. Joseph Denardi: Lloyd, can you speak to M&A a bit maybe the nature of your pipeline, is that still a priority for capital deployment? Would you characterize the pipeline as smaller opportunities or larger and maybe just kind of your level of comfort in using equity to finance anything there? Thank you. Lloyd Howell: Sure, we believe as we said our balance sheet is certainly a strategic asset uncoupled with our strong generation of cash really puts us in a good position to not only pursue M&A opportunities but also as we did this quarter the uptick with the dividend and the increased authorization with our share repurchase program. Specifically regarding M&A, our pipeline has been growing consistent with the capabilities Horacio and I long talked about. Software systems development, AI, digital, data analytics and we're looking at a variety of opportunities and different ways to deploy that capital as we did with the Tracepoint investment. These are all different maturation points increasingly these are opportunities that we've cultivated which is been really good and consistent with the individual market strategies and where we think increased demands going to come with our clients. So as you know we have a pretty high bar, we have historically looked for capability tuck-ins. I'd characterize them as that's very much consistent with what we've always said. But I'm very pleased with the volume and remained confident that the inorganic contribution will pick up overtime. Joseph Denardi: Okay that's helpful. And then Horacio, can you just update us on the classified intel business or customer set there. Maybe how that's going with the semi recent leadership changes at this point and visibility you have been to - that customer again being a driver of growth for you all? Thank you. Horacio Rozanski: Sure. It's always difficult on these calls to talk our intel business in any detail. But let me say the following, we're seeing more pick up in both proposal, opportunity and even some really interesting awards albeit small. Again the use of technology to help drive those missions. I think if we have fallen behind a little bit on that part of the business. Is we were not implementing or absorbing these new technologies into that business as quickly as we were in our defense and our civilian portfolio and that has changed? over hand with some old contracts that frankly we were going to out of one way or the other and so the numbers as you see them right now reflect that mix shift that is working its way through the system. But I'm very optimistic about where that business is going. I think once the awards that we are expecting finally stop moving to the right and get awarded. I think in the next year see that business - I'd like to see for sure see that business return to a healthy growth rate. It's a good business and we do some really just extraordinary work there for our clients and our clients value it, which is really where it all begins for us. Is if our client value, we need to figure how to do more of it, how to do better and how to grow the business overtime. Joseph Denardi: Thank you. Operator: Our next question comes from Louie DiPalma of William Blair. Your line is open. Louie DiPalma: Horacio, you've demonstrated a leadership in dating analytics in addition to AI and in 2018, you announced that you won a very strategic $885 million eMAPS contract or Machine Learning and Data Analytics. We have heard that there will be an eMAPS sequel contract that is significantly larger than the existing eMAPS contract something in the $1.5 billion range. And I was wondering because I thought your existing eMAPS contract had a five-year duration. Are they re-competing your existing contract and is the DoD happy and satisfied with your existing performance with machine learning, data analytics and AI in general? Thanks. Horacio Rozanski: Let me answer the sort of the last question first and work my back to the front of your question. The answer is yes. Across all of our work, we continue our leadership on AI, on data analytics, on machine learning and on being able to deliver those kinds of capabilities to mission, eMAPS being one of those examples our work at the J demonstrates that and so many other places. I don't want to speak specifically about any one contract on this call. But I will say this, it is not unusual for contracts to run out of ceiling ahead of the five-year timeline and I think that is in some ways a demonstration that there's so much value being created that was originally expect a ceiling that was originally expected to last five years. Sometimes gets work through in three or four. Again not because the clients see so much value that the missions that expands and then recomplete will come along and the recomplete will be larger to accommodate. Call it the higher annual burn rate in the contract and so, we have a good number of contracts in our portfolio some very large ones that actually will get competed early and almost every time it's because again there's been mission expansion because of the quality of the services being provided in the contract not because the client is dissatisfied with the services. Louie DiPalma: Thanks Horacio, that's all I had. That was very helpful. Operator: Our next question comes from Seth Seifman of J.P. Morgan. Your line is open. Ben Arnstein: This is actually Ben on for Seth. I guess I wanted to go back to the questions about revenue. The high end of the guidance for this year implies another quarter of growth at about 3% in Q4. I guess how should we think about the trajectory of organic growth beyond this year. It sounds like some of the issues are going to last couple of quarters. So any color you can give on that. And then is it still reasonable to think about getting to inorganic growth rate that was something closer to the original guidance for this year as you moved past some of these headwinds? Lloyd Howell: The balance of the year as we said in our prepared remarks. There are couple of dynamics that would have to be less than what we're expecting. Certainly the impact of billable expenses that we have launched that were focused on revenue ex-billable expenses that has an impact on revenue as you know. So that is not as much of a headwind than what we're expecting that sort of helps a lot and then the productivity topic that we talked about, where we're seeing a normalization with available labor and PTO usage. If that were to slow down or feather down like we had originally expected we could see that become a contribution to getting toward the high end of the range. And then lastly, the one that Horacio and I feel we have a fair amount of control on is recruiting. If we execute in a manner that we expect to, it will slowly build back up and would also be a tailwind to pushing us to the top end of the range. I think it's too early to get into looking out beyond the next couple of quarters and as we've said, we expect this to be a building process. But at the appropriate time we'll give guidance as to what FY 2022 is going to look like. Horacio Rozanski: let me build on that and leave you with three thoughts perhaps. The first one is, as we've discussed during this whole call. We view our business as very robust with lots of opportunities in the pipeline. Timing is a bit uncertain but we're well positioned to win in the market and the medium and long-term trends we believe are in our favor. Point number two as Lloyd said, we expect top line performance to be a little choppy for the next couple of quarters potentially into the early quarters of next year. But we have some work to do both around capturing the opportunities that are out there and ramping them up as quickly as our clients will allow us and hiring aggressively against them and we are all over that. And then the last point that I don't want to lose is, how strong our bottom line performance has been, how solid it is even with some volatility at the top line and the expectation that will also continue overtime. Ben Arnstein: Great, thank you. Operator: There are no further question. I'd like to turn the call back over to Horacio Rozanski for any closing remarks. Horacio Rozanski: Thank you everyone for your questions. I hope the discussion today gives you a deeper understanding of the dynamics driving our third quarter performance and our areas of focus going forward both in the near and in the long-term. As an institution that has evolved and succeeded for more than a century. Booz Allen is constantly striving to improve and we are especially focused on living up to our purpose, empowering people to change the world. So on that note, I'd like to close today by calling attention to our recently released environmental, social and governance impact report. It is another way for us to convey our firm's aspirations, our vision and our impact. Today our stakeholders have broad expectations for transparency. Our clients and our investors, non-profits and community partners, regulators and suppliers and especially our employees. They all want to understand a company's values and performance as a corporate citizen. Our 2020 EGS impact report takes a fresh approach to providing that transparency. It's informed by our stakeholders and is aligned to the GRI standards. The world's most widely used standards for corporate sustainability reporting. It's a snapshot in time and will evolve as we mature the governance and measurement of our corporate impact. If you haven't yet seen it, the report is called The Future Can't Wait and it is available on our website. I invite you to take a look. Once again thank you for your time and your participation this morning and have a great day. Operator: Ladies and gentlemen. This does conclude the conference. You may now disconnect. Everyone have a great day.
Booz Allen Hamilton (NYSE:BAH) Financial Performance and Market Position
- Earnings Per Share (EPS) of $1.45, slightly below the estimated $1.48, with a history of exceeding expectations.
- Revenue of approximately $2.92 billion, a 13.5% increase compared to the previous year, demonstrating capacity for growth.
- Price-to-Earnings (P/E) ratio of approximately 19.44, indicating the market's valuation of its earnings.
Booz Allen Hamilton (NYSE:BAH) is a leading consulting firm that primarily serves the U.S. government. The company is renowned for its extensive consulting services, with long-term government contracts making up 98% of its revenue. This focus ensures revenue stability, as highlighted by its consistent financial performance. Booz Allen operates in the competitive Zacks Consulting Services industry, where it has demonstrated strong growth.
On January 31, 2025, Booz Allen Hamilton reported earnings per share (EPS) of $1.45, slightly below the estimated $1.48. Despite this, the company has a history of exceeding expectations, as seen in its fiscal 2025 third quarter. During this period, Booz Allen reported an adjusted EPS of $1.55, surpassing the forecasted $1.52, and marking a 4.73% earnings surprise. This performance reflects the company's ability to deliver strong financial results.
Booz Allen Hamilton generated revenue of approximately $2.92 billion, which fell short of the estimated $3.09 billion. However, this figure still represents a 13.5% increase compared to the previous year. The company has consistently surpassed consensus revenue estimates in each of the last four quarters, demonstrating its capacity for growth. In the quarter ending December 2024, Booz Allen's revenue was 2.71% above the Zacks Consensus Estimate.
Despite the positive quarterly performance, Booz Allen Hamilton's stock price experienced a decline of 0.55%. This drop occurred as the company's future guidance fell short of the elevated expectations set by analysts. The market's reaction underscores the importance of meeting or exceeding analyst expectations for future performance, even when current results are strong.
Booz Allen Hamilton's financial metrics provide further insight into its market position. The company has a price-to-earnings (P/E) ratio of approximately 19.44, indicating the market's valuation of its earnings. Its price-to-sales ratio stands at about 1.42, while the enterprise value to sales ratio is around 1.40. These figures suggest how investors value the company's sales and overall valuation. Additionally, Booz Allen's debt-to-equity ratio of approximately 0.25 indicates a relatively low level of debt compared to equity, reflecting financial stability.
Booz Allen Hamilton Holding Corporation (NYSE:BAH) Quarterly Earnings Preview
- Wall Street analysts project an earnings per share (EPS) of $1.48 and revenue of approximately $2.87 billion for the upcoming quarter.
- Booz Allen Hamilton has a history of exceeding market expectations, with an average surprise of 11.7% over the last four quarters.
- The company's financial metrics reveal a price-to-earnings (P/E) ratio of 19.87, a debt-to-equity ratio of 3.01, and an earnings yield of 5.03%.
Booz Allen Hamilton Holding Corporation (NYSE:BAH), a leading management and information technology consulting firm, primarily serves the U.S. government, including defense, intelligence, and civil markets. Competing with giants like Accenture and Deloitte, Booz Allen Hamilton is renowned for its robust performance and ability to surpass market expectations.
As the firm approaches its quarterly earnings release on January 31, 2025, analysts are forecasting an EPS of $1.48 and expect revenues to hit around $2.87 billion. Historically, the company has outperformed the Zacks Consensus Estimate in three of the last four quarters, boasting an average surprise of 11.7%.
For the forthcoming quarter, revenue estimates are pegged at $2.84 billion, indicating a 10.5% year-over-year growth. This anticipated increase is attributed to robust service demand, an uptick in headcount, and higher billable expenses. Consequently, the expected rise in earnings is linked to these increased revenues for the quarter ending December 2024.
Examining Booz Allen Hamilton's financial metrics offers insights into its market valuation. The firm's P/E ratio stands at approximately 19.87, its price-to-sales ratio at about 1.42, and its enterprise value to sales ratio is around 1.69. These figures indicate the market's valuation of the company's earnings and sales.
Notably, Booz Allen Hamilton's debt-to-equity ratio is high at approximately 3.01, suggesting a significant level of debt. However, with a current ratio of about 1.56, the company maintains a reasonable level of short-term assets to cover its short-term liabilities. The earnings yield is calculated to be around 5.03%, providing an insight into the return on investment.
Booz Allen Hamilton Holding Corporation Surpasses Fourth-Quarter Fiscal 2024 Expectations
- Earnings per share (EPS) of $1.33, beating the estimated EPS of $1.23.
- Revenue reached approximately $2.77 billion, exceeding estimates.
- Net income increased by 287% year over year, with revenue growth of nearly 14%.
Booz Allen Hamilton Holding Corporation (NYSE:BAH), a prominent government IT specialist, recently reported its fourth-quarter fiscal 2024 results, which have caught the attention of investors and analysts alike. On Friday, May 24, 2024, BAH announced earnings per share (EPS) of $1.33, surpassing the estimated EPS of $1.23. Additionally, the company reported revenue of approximately $2.77 billion, exceeding the estimated revenue of roughly $2.72 billion. This performance not only highlights the company's financial health but also its ability to exceed market expectations.
Following the earnings announcement, BAH reached a new all-time high, with its stock price climbing as much as 7% during trading on Friday. This surge was a direct response to the company's earnings that exceeded both top- and bottom-line expectations. CEO Horacio Rozanski, in a discussion with Nicole Petallides, shared that this fiscal year has been the best performance since the company's initial public offering in 2010. This significant achievement underscores the company's robust growth and operational success, reflecting positively on investor sentiment.
The company's net income saw a dramatic increase of 287% year over year, while revenue grew nearly 14%, driven by significant contract wins in the federal defense and civil markets. Booz Allen Hamilton also expanded its workforce by 7.4% over the past year, indicating a positive outlook based on future contracted business. These factors contribute to the company's optimistic growth prospects for fiscal 2025, attributed to the government's increasing demand for high-tech assistance.
Financially, Booz Allen Hamilton exhibits a price-to-earnings (P/E) ratio of approximately 50.38, indicating investors' willingness to pay a premium for its earnings. The company's price-to-sales (P/S) ratio stands at roughly 1.99, suggesting that investors are paying nearly $2 for every $1 of sales. Despite a high debt-to-equity (D/E) ratio of 3.35, indicating a higher reliance on debt for financing, the company's performance and growth prospects seem to justify investor confidence.
Moreover, the total backlog, an indicator of future revenue potential, increased by 8.4% from the year-ago quarter to $33.82 billion, slightly missing the estimate of $33.91 billion. This growth in backlog suggests a healthy pipeline of future projects for Booz Allen, further supporting the positive investor sentiment surrounding the stock. With such strong fiscal fourth-quarter performance and optimistic projections for the future, Booz Allen Hamilton continues to demonstrate its leadership and resilience in the government IT sector.
Wells Fargo Updates on Booz Allen Hamilton
- Wells Fargo has updated Booz Allen Hamilton to Equal-Weight, indicating a hold position at a price of $152.36.
- Booz Allen Hamilton's significant role in government tech and AI initiatives positions it favorably, with a stock performance increase of 7.62% over the past month.
- Analysts set a consensus estimate for revenues at approximately $2.72 billion for the fiscal fourth quarter, with an expected EPS of $1.22.
Wells Fargo's recent update on Booz Allen Hamilton (NYSE:BAH) to Equal-Weight reflects a cautious yet observant stance on the company's stock. This decision, announced on May 23, 2024, when BAH was priced at $152.36, suggests a hold position, indicating that Wells Fargo sees the stock as fairly valued at its current price. Booz Allen Hamilton, a prominent consulting firm specializing in technology and government services, plays a crucial role in military modernization and government AI initiatives. The company's involvement in these areas is particularly significant given the current global emphasis on defense and technological advancements.
Booz Allen Hamilton's anticipation of reporting its fiscal fourth-quarter earnings showcases the company's strong performance and growth trajectory. The firm's significant role in government tech hiring and bookings, especially in the context of increased demand due to multiple wars and a surge in artificial intelligence, positions it favorably in the market. This growth is further evidenced by the company's stock performance, which has seen a notable rise of 7.62% over the past month, outperforming both the Business Services sector and the S&P 500.
Analysts, including those from William Blair and Stifel, have expressed optimism about Booz Allen Hamilton's prospects. Stifel's upgrade of BAH's price target to $170 from $155, while maintaining a buy rating, underscores the positive outlook based on the government's focus on AI, cyber, and IT modernization. This sentiment is supported by recent budget and supplemental spending packages, which are expected to benefit Booz Allen Hamilton's financial results significantly.
The company's financial performance is anticipated to reflect this positive momentum, with analysts setting the consensus estimate for revenues at approximately $2.72 billion for the fiscal fourth quarter. This represents an 11.9% increase compared to the same period last year, driven by improvements across its Defense, Civil, and Intelligence business segments. The expected earnings per share (EPS) of $1.22, marking a 20.79% increase from the previous year, further highlights Booz Allen Hamilton's strong performance and growth prospects.
Booz Allen Hamilton's stock movement, with a recent closing at $152.55, indicates a positive trend, especially in contrast to the broader market downturn. The company's market capitalization of roughly $19.77 billion and its trading volume on the New York Stock Exchange (NYSE) reflect its significant presence and investor interest. As Booz Allen Hamilton prepares to report its earnings, the market's anticipation underscores the company's potential to continue its growth trajectory, supported by its strategic focus on military modernization and government AI initiatives.
Booz Allen Hamilton's Quarterly Earnings Preview
- Booz Allen Hamilton is set to release its quarterly earnings with an anticipated EPS of 1.22 and revenue estimates of $2.72 billion.
- The company holds a Zacks Rank #2 (Buy), indicating positive analyst sentiment and expectations of considerable growth.
- Anticipated revenue growth of 11.9% year-over-year, driven by improvements across key business segments.
Booz Allen Hamilton (NYSE:BAH) is gearing up to release its quarterly earnings on Friday, May 24, 2024, before the market opens. This event is highly anticipated by investors and analysts alike, as Wall Street estimates suggest an earnings per share (EPS) of 1.22 and revenue for the quarter estimated to be approximately $2.72 billion. Booz Allen Hamilton, a prominent consulting firm, operates within the defense, civil, and intelligence sectors, providing a wide range of services from strategic consulting to technology solutions.
The company's performance is part of a broader trend among firms in strong business industries, as highlighted by Zacks Investment Research. Alongside Intuit (INTU) and Workday (WDAY), Booz Allen Hamilton holds a Zacks Rank #2 (Buy), indicating positive analyst sentiment and expectations of considerable growth in their upcoming financial results. This optimism is rooted in the company's consistent ability to exceed expectations, having outperformed the Zacks Consensus Estimate in three of the last four quarters with an average surprise of 12.7%.
For the fiscal fourth quarter, analysts have set the consensus estimate for Booz Allen Hamilton's revenues at approximately $2.72 billion, marking an 11.9% increase compared to the same period last year. This expected growth is driven by improvements across the company's key business segments. Specifically, the Defense segment's growth is likely to be supported by the Aerospace and Joint Combatant Command accounts, while the Civil segment's revenues are anticipated to benefit from various growth initiatives.
The company's anticipated earnings of $1.22 per share for the quarter ending in March 2024 represent a significant increase of 20.8% compared to the same period last year. This growth in earnings per share is supported by a positive adjustment in the consensus EPS estimate, which has risen by 1.3% over the past month. Such adjustments are crucial for investors to consider, as changes in earnings estimates are closely linked to the stock's short-term price movements.
Booz Allen Hamilton's financial health, as evidenced by its previous quarterly revenue of approximately $2.57 billion and net income of about $145.64 million, underscores the company's robust operational performance. With a gross profit of roughly $1.39 billion and an operating income of around $247.56 million, the firm demonstrates strong profitability and efficiency in its operations. As the earnings release date approaches, investors and analysts will be keenly watching to see if Booz Allen Hamilton can continue its trend of exceeding expectations and driving growth across its key business segments.
