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Why Booz Allen (BAH) Is Down 3.3% Since Last Earnings Report

Zacks Equity Research

Shares of Booz Allen Hamilton Holding Corporation BAH have declined 3.3% since its second-quarter fiscal 2020 earnings release on Nov 1, compared with 1.5% decline of the industry it belongs to.

The price decline can be mainly attributed to weak EPS guidance. Although the guidance has been raised to $3-$3.1 from $2.9-$3.05, the midpoint of the raised guided range ($3.05) is below the current Zacks Consensus Estimate of $3.11.

Let’s see the quarterly numbers in detail

Earnings, Revenues, Backlog & Headcount Increase Y/Y

Adjusted EPS of 81 cents beat the consensus mark by 15.7% and improved 19.1% on a year-over-year basis. Total revenues of $1.8 billion surpassed the Zacks Consensus Estimate by 2.9% and increased 12.7% year over year. Revenues excluding billable expenses were $1.3 billion, up 12.7% on a year-over-year basis. Billable expenses accounted for 30% of revenues.

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Total backlog increased 7.2% from the prior-year quarter to $22.9 billion. Funded backlog of $4.4 billion improved 4.8%. Unfunded backlog was up 12.3% to $5.4 billion. Priced options went up 6.1% to $13.2 billion. Book-to-bill ratio was 2.68, down 26.8% year over year. Headcount of 26,984 increased 6.5% year over year.

Operating Performance Improves

Adjusted EBITDA of $191.7 million increased 17% year over year. Adjusted EBITDA margin on revenues increased to 10.5% from 10.2% in the year-ago quarter. Adjusted EBITDA margin on revenues, excluding billable expenses, increased to 15% from 14.4% in the year-ago quarter.

Adjusted operating income was $172 million, up 16.7% year over year. Adjusted operating income margin on revenues was 9.5%, up from the year-ago quarter figure of 9.1%. Adjusted operating income margin on revenues, excluding billable expenses, was 13.4% compared with 13% in the year-ago quarter.

Booz Allen Hamilton Holding Corporation Price, Consensus and EPS Surprise

Booz Allen Hamilton Holding Corporation Price, Consensus and EPS Surprise
Booz Allen Hamilton Holding Corporation Price, Consensus and EPS Surprise

Booz Allen Hamilton Holding Corporation price-consensus-eps-surprise-chart | Booz Allen Hamilton Holding Corporation Quote

Balance Sheet & Cash Flow

Booz Allen exited the fiscal second quarter with cash and cash equivalents of $781.5 million compared with $649.1 million at the end of the prior quarter. Long-term debt (net of current portion) was $2 billion, compared with $2.1 billion in the previous quarter. The company generated $215.7 million of net cash from operating activities. Capital expenditure was $32.6 million and free cash flow was $183.1 million.

It paid out dividend worth $32.4 million and repurchased shares worth $2.4 million in the reported quarter.

Fiscal 2020 Outlook

The company raised its revenue growth projection to 9-11%, from 6-9% expected earlier. Adjusted EBITDA margin on revenues is continued to be anticipated in the low 10% range. Operating cash flow is now expected in the range of $450-$500 million, compared with the previous expectation of $400-$450 million.

Zacks Rank and Other Stocks to Consider

Booz Allen currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader Zacks Business Services sector are Global Payments GPN, Mastercard MA and Cardtronics CATM. While Global Payments sports a Zacks Rank #1, Mastercard and Cardtronics carry a Zacks Rank #2.

Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 16% and 4%, respectively.

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Cardtronics PLC (CATM) : Free Stock Analysis Report
 
Mastercard Incorporated (MA) : Free Stock Analysis Report
 
Global Payments Inc. (GPN) : Free Stock Analysis Report
 
Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report
 
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