Booz Allen (BAH) Gains On Growth & Innovation Initiatives

Booz Allen Hamilton Holding Corporation’s (NYSE:BAH) shares have surged 40.7% in the past year compared with 25.7% rally of the industry it belongs to. The stock improved 5.8% following second-quarter fiscal 2019 results.

In the last reported quarter, adjusted earnings per share (EPS) came in at 68 cents, which beat the Zacks Consensus Estimate by 8 cents and improved on a year-over-year basis. Revenues of $1.61 billion missed the consensus mark by $26 million but improved 4.6% year over year.

Booz Allen has an impressive earnings surprise history. The company’s earnings beat estimates in all of the trailing four quarters, the average being 16.2%. In the past 30 days, the Zacks Consensus Estimate for fiscal third-quarter earnings has been revised 1.8% upward.

Let’s delve in to the factors that are driving Booz Allen.

Vision 2020

Booz Allen is currently implementing Vision 2020 to counter competition and achieve sustainable long-term 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 as well as expanding into commercial and international business.

Through the implementation of Vision 2020, Booz Allen is seeing higher backlog growth, a shift in talent to more technical expertise and strong performance in the global commercial market.

Booz Allen Hamilton Holding Corporation EPS Diluted (TTM)

Differentiated Business Models

Booz Allen developed its solutions business to create diverse business models and sales channels, increase client acquisition as well as enhance future revenue opportunities. The company also diversified itself in the talent market to ensure attraction and retention of quality talent from various disciplines.

These initiatives boosted the company’s ability to introduce various offerings, through which it has been receiving highly technical, mission-critical work for federal government business. All these ensure long-term growth for the company.

Innovation

The company is also laboring hard in innovation areas — Machine Intelligence and Directed Energy — to ensure business development over the long haul.

On the Machine Intelligence front, Booz Allen is using machine learning and artificial intelligence to create a congenial working environment across its client organizations where people and intelligent machines will collaborate to achieve targets. Through the Directed Energy business, the company is trying to help clients as a technology maturation agent, integrator and a solutions provider.

Zacks Rank & Other Stocks to Consider

Currently, Booz Allen is a Zacks Rank #2 (Buy) stock. 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 Business Services sectorinclude Paychex, Inc (NASDAQ:PAYX) , Genpact Limited (NYSE:G) and WEX Inc (NYSE:WEX) , each carrying a Zacks Rank #2. The long-term expected EPS (three to five years) growth rate for Paychex, Genpact and WEX is 8.5%, 10% and 15%, respectively.

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