Over the past six months, Booz Allen Hamilton’s shares (currently trading at $123.45) have posted a disappointing 17.4% loss while the S&P 500 was flat. This may have investors wondering how to approach the situation.
Following the pullback, is now a good time to buy BAH? Find out in our full research report, it’s free.
Why Is BAH a Good Business?
With roots dating back to 1914 and deep ties to nearly all U.S. cabinet-level departments, Booz Allen Hamilton (NYSE: BAH) provides management consulting, technology services, and cybersecurity solutions primarily to U.S. government agencies and military branches.
1. Core Business Firing on All Cylinders
Investors interested in Government & Technical Consulting companies should track organic revenue in addition to reported revenue. This metric gives visibility into Booz Allen Hamilton’s core business because it excludes one-time events such as mergers, acquisitions, and divestitures along with foreign currency fluctuations - non-fundamental factors that can manipulate the income statement.
Over the last two years, Booz Allen Hamilton’s organic revenue averaged 13.2% year-on-year growth. This performance was fantastic and shows it can expand quickly without relying on expensive (and risky) acquisitions. 
2. Economies of Scale Give It Negotiating Leverage with Suppliers
With $11.78 billion in revenue over the past 12 months, Booz Allen Hamilton is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.
3. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Booz Allen Hamilton’s EPS grew at a spectacular 14.5% compounded annual growth rate over the last five years, higher than its 10.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Final Judgment
These are just a few reasons why we think Booz Allen Hamilton is a great business. After the recent drawdown, the stock trades at 18× forward P/E (or $123.45 per share). Is now a good time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More Than Booz Allen Hamilton
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