Shareholders of Booz Allen Hamilton would probably like to forget the past six months even happened. The stock dropped 27.8% and now trades at $113.96. This might have investors contemplating their next move.
Following the drawdown, is now the time to buy BAH? Find out in our full research report, it’s free.
Why Is Booz Allen Hamilton 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
We can better understand Government & Technical Consulting companies by analyzing their organic 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
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
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 high-quality business. After the recent drawdown, the stock trades at 16.4× forward price-to-earnings (or $113.96 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
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