What???s In Store For Booz Allen Hamilton???s (BAH) Q3 Earnings?

Booz Allen Hamilton Holding Corporation (NYSE:BAH) will report third quarter fiscal 2019 results on Feb 1 before the bell. In the fiscal second quarter, the company delivered a positive earnings surprise of 13.3%.

The surprise history has been good in Booz Allen’s case. The company surpassed estimates in each of the trailing four quarters, with an average positive surprise of 16.2%.

We observe that the company's shares have gained 21.7% over the past year, outperforming its industry’s gain of 12.8%.

Let's see how things are shaping up for this announcement.

Revenues Excluding Billable Expenses to Drive the Top Line

Booz Allen’s major focus is on revenue excluding billable expenses as it drives most of its profitability. This revenue is expected to witness significant growth in the to-be-reported quarter driven by strong demand across the company’s entire client base. The bipartisan budget agreement that encouraged several federal clients to increase their spending is enabling the company to improve contract level performance.

Booz Allen Hamilton Holding Corporation Revenue (TTM)

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

Notably, the Zacks Consensus Estimate for revenues is pegged at $1.6 billion, above $1.5 billion reported in the year-ago quarter.

Operational Excellence to Boost the Bottom Line

Strong contract level performance, operational excellence and cost management are expected to expand margins in the to be reported quarter. Margin expansion along with revenue growth and lower tax rate are expected to drive earnings growth.

The consensus estimate for EPS is pegged at 58 cents, reflecting rise from 48 cents reported in the year-ago quarter.

Zacks Model Suggests a Beat

Please note that according to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or #3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or #5 (Strong Sell) stocks are best avoided, especially if they have a negative Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Booz Allen has a Zacks Rank #2 and an Earnings ESP of +4.22%, a combination that suggests that the companyis likely to beat.

Other Stocks to Consider

Here are a few other stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these also have the right combination of elements to beat on earnings.

First Data (NYSE:FDC) has an Earnings ESP of +3.87% and a Zacks Rank #2. The company is scheduled to release third-quarter 2018 results on Feb 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

IQVIA Holdings (NYSE:IQV) has an Earnings ESP of +1.04% and a Zacks Rank #3. The company is expected to report third-quarter 2018 results on Feb 13.

Broadridge Financial (NYSE:BR) has an Earnings ESP of +1.07% and a Zacks Rank #3. The company is slated to report second-quarter 2019 results on Feb 7.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?

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