Group 1 - Booz Allen Hamilton Corp. has been named "Stock to Study" by BetterInvesting Magazine for September 2025, indicating potential interest from investors regarding its stock valuation [1] - The upcoming report will provide comprehensive fundamental data on Booz Allen, including sales, earnings, pre-tax profit, and return on equity, accessible through the National Association of Investors Corp. [2] - The same issue of BetterInvesting Magazine will also feature a fundamental review of Nike Inc., suggesting that it is considered undervalued and worthy of further study [3]

Founded 1914 Headquartered in McLean, VA NYSE Ticker: BAH $10.7B in FY24 Revenue Copyright © Booz Allen Hamilton Inc. 2025 www.boozallen.com OK TO WORK DESIGN Booz Allen Hamilton Internal Copyright © Booz Allen Hamilton Inc. 2025 Copyright © Booz Allen Hamilton Inc. 2025 DISCLAIMER Disclaimer Booz Allen's fiscal year ends on March 31 and unless otherwise noted, references to fiscal year, fiscal or FY are for fiscal years ended March 31. Note Regarding Non-GAAP Financial Data Information Booz Allen discloses ...

Investment Rating - The report downgrades Booz Allen Hamilton (BAH) to Sell from Neutral, indicating limited revenue and earnings growth potential in the medium term, with valuation still having downside risk [1][45]. Core Insights - Medium-term revenue growth is expected to be closer to flat due to pressure on federal civilian spending and shifting priorities within the Department of Defense (DoD) [1][2]. - Margin pressures are anticipated as the industry shifts towards more outcomes-based contracting and fixed-price contracts, which could increase risk for contractors [3][31]. - BAH's current trading multiples are 17X P/E and 12X EBITDA on CY26E, which are in line with historical averages but could decline further if earnings remain flat [4][41]. Revenue Outlook - Federal civilian agency budgets are under pressure, leading to expectations of organic revenue growth for BAH being closer to flat for the next several years [2][18]. - The company reported a book-to-bill ratio of 0.71X for the March 2025 quarter, indicating potential challenges in securing new contracts [17][25]. Margin Analysis - The industry is experiencing a shift towards more fixed-price contracts, which may lead to increased competition and pressure on margins [3][31]. - Historical trends show that during periods of revenue pressure, margins in the government services industry have declined due to increased price competition [31][34]. Valuation Metrics - BAH's valuation metrics indicate it trades at 17X CY26E P/E and 12X CY26E EBITDA, which are consistent with its 15-year historical average [4][41]. - The report suggests that if growth and margin pressures continue, BAH's valuation could decline further [4][41]. Financial Projections - The report provides revised financial forecasts for BAH, with expected revenues of $12,220 million for FY26 and $12,342 million for FY27, reflecting lower organic growth assumptions [40]. - Adjusted EBITDA is projected at $1,335 million for FY26 and $1,337 million for FY27, indicating a downward revision from previous estimates [40][45].

Core Viewpoint - Goldman Sachs analyst Noah Poponak downgraded Booz Allen Hamilton from Neutral to Sell, lowering the price forecast from $108 to $94, citing limited revenue and earnings growth in the medium term and ongoing valuation risks [1]. Group 1: Revenue and Earnings Outlook - Medium-term revenue growth is now expected to be closer to flat due to pressure on federal civilian spending and shifting priorities within the U.S. Department of Defense [2]. - Organic revenue growth for Booz Allen Hamilton is anticipated to be flat for the next few years, which may take time for the stock to absorb after its previous strong growth [4]. Group 2: Contracting and Margins - The analyst highlights a shift toward more outcomes-based and fixed-price contracting in the sector, raising concerns about increased risk for contractors and potential pressure on margins [4]. - Federal civilian agency budgets are under pressure, with other government spending areas taking priority, which may impact Booz Allen Hamilton's performance [3]. Group 3: Market Reaction - Booz Allen Hamilton shares closed down by 4.70% to $104.66 following the downgrade [5].

Core Viewpoint - Booz Allen Hamilton's shares have experienced significant volatility following a downgrade by Goldman Sachs, reflecting concerns over medium-term earnings growth and revenue projections [1][2][3] Group 1: Stock Performance - Shares of Booz Allen Hamilton fell by as much as 4.9% before recovering slightly to a 4% decline [1] - The stock had previously sold off by a double-digit percentage after the fiscal-fourth-quarter earnings release [1] Group 2: Analyst Downgrade - Goldman Sachs downgraded Booz Allen Hamilton from neutral to sell, lowering the price target from $108 to $94 [2] - The current stock price is noted at $104.75 [2] Group 3: Earnings Growth Outlook - Goldman Sachs analysts project medium-term earnings growth for Booz Allen as "flat," with revenue growth expected between 0% and 4% for fiscal 2026, down from 12.4% last year [3] - Adjusted earnings are projected to be in the range of $6.20 to $6.55, compared to $6.35 last year [3] Group 4: Long-term Growth Potential - Despite short-term challenges, there is a high likelihood that Booz Allen's growth will resume after this year, particularly if the civil business stabilizes [6][7] - The defense and intelligence sectors, which account for 65% of revenue, are expected to grow in double digits, supporting overall company growth [6] - Historically, Booz Allen has achieved an 11.7% organic growth rate over the past three years [6] - If growth resumes, the P/E multiple could return to the low-20s, which has been the average over the past decade [7]

Core Insights - Booz Allen Hamilton Holding Corp. (BAH) reported mixed fourth-quarter fiscal 2025 results, with earnings exceeding estimates while revenues fell short [1][2] Financial Performance - Adjusted earnings per share were $1.61, surpassing the Zacks Consensus Estimate by 1.3% and increasing 21.1% year-over-year [2] - Revenues totaled $2.3 billion, missing the consensus estimate by 1.5% but showing a year-over-year increase of 7.3% [2] - Excluding billable expenses, revenues were $2.05 billion, reflecting a 6.2% year-over-year growth [2] Backlog and Book-to-Bill Ratio - Total backlog increased by 14.8% year-over-year to $37 billion, although it fell short of the estimated $38.7 billion [3] - Funded backlog rose 5.6% to $4.4 billion, missing the anticipated $4.9 billion, while unfunded backlog increased by 4.9% to $8.8 billion, also below the estimate of $9.8 billion [3] - Priced options grew by 21.9% to $23.8 billion, slightly missing the expectation of $23.9 billion [4] - The book-to-bill ratio improved to 1.39 from 1.22 in the previous year [4] EBITDA and Margins - Adjusted EBITDA reached $1.32 billion, an 11.9% increase from the prior year, aligning with estimates [5] - The adjusted EBITDA margin remained flat at 11% year-over-year [5] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the quarter were $885 million, up from $554 million in the previous quarter [6] - Long-term debt increased by 16.9% year-over-year to $3.9 billion [6] - The company generated $218 million in net cash from operating activities, with capital expenditures of $1.2 billion and free cash flow of $911 million [6] Fiscal 2026 Outlook - For fiscal 2026, BAH anticipates revenues between $12 billion and $12.5 billion, with expected growth of 0-4% [7] - Adjusted EPS is projected to be between $700 million and $800 million, with capital expenditures around $110 million [7]

Core Viewpoint - Booz Allen Hamilton Holding Corp. generates approximately 97% of its revenue from the federal government, leading to significant stock performance fluctuations due to government budget uncertainties [1][2]. Group 1: Financial Performance - Booz Allen Hamilton's stock has seen a total return of over 500% in the last 10 years, but it is down more than 16% in the last 12 months [1]. - The company's earnings per share (EPS) has increased at a compounded annual growth rate (CAGR) of 14.5% over the past five years, while revenue has grown at a CAGR of 10.1% [7]. - The company maintains a 50% operating margin, indicating strong profitability as revenue expands [8]. Group 2: Market Position and Valuation - Booz Allen Hamilton is positioned as the federal government's leading artificial intelligence (AI) provider, giving it a competitive advantage [2][3]. - The stock is currently trading at a price-to-earnings (P/E) ratio of around 19x, which is below the sector average of approximately 29x for defense and aerospace stocks [9]. - The stock is also trading at a discount to its historical P/E ratios over the last five years, suggesting it may be undervalued [10]. Group 3: Upcoming Events and Expectations - The company's fourth quarter earnings report for fiscal year 2025 is scheduled for May 23, 2025, which may reflect some weakness but is expected to provide appealing forward guidance [6][3]. - Recent performance indicates that the stock is approaching its 200-day simple moving average at $137.70, and a strong earnings report could lead to a reassessment of current price targets by analysts [11].

Core Insights - Booz Allen Hamilton (BAH) reported revenue of $2.97 billion for the quarter ended March 2025, reflecting a year-over-year increase of 7.3% [1] - Earnings per share (EPS) for the quarter was $1.61, up from $1.33 in the same quarter last year, indicating a positive trend in profitability [1] - The reported revenue was below the Zacks Consensus Estimate of $3.02 billion by 1.50%, while the EPS exceeded the consensus estimate of $1.59 by 1.26% [1] Financial Performance Metrics - Total backlog for Booz Allen stood at $37.03 billion, which was below the two-analyst average estimate of $38.61 billion [4] - Revenue from U.S. Government Defense Clients was $1.53 billion, surpassing the average estimate of $1.50 billion, with a year-over-year increase of 14.2% [4] - Revenue from U.S. Government Civil Clients was reported at $989 million, below the average estimate of $1.03 billion, reflecting a year-over-year increase of 4.7% [4] - Revenue from U.S. Government Intelligence Clients was $458 million, which was lower than the average estimate of $496.32 million, with a year-over-year increase of 3% [4] Stock Performance - Booz Allen's shares have returned +8.2% over the past month, compared to a +10.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company achieved over 12% revenue growth, nearly all organic, and adjusted EBITDA increased 12% to $1,315 million, yielding an adjusted EBITDA margin of 11% [29][30] - Adjusted diluted earnings per share grew over 15%, driven by increased profitability and a lower share count, with diluted earnings per share at $1.52, a 55% increase year over year [38][39] - Free cash flow for the quarter was $194 million, resulting from $218 million of cash from operations, less $24 million of CapEx [39] Business Line Data and Key Metrics Changes - The defense and intelligence businesses saw revenue growth of 145% year over year, while the civil business experienced flat revenue in the fourth quarter [32][35] - The company anticipates a low double-digit revenue decline in the civil business for fiscal year 2026 due to a slowdown in procurement and spending [35][42] - The AI business grew over 30% year over year to approximately $800 million, indicating strong demand and increasing integration into government operations [19][30] Market Data and Key Metrics Changes - The company ended the fiscal year with a record backlog of $37 billion, up 15% year over year, and a qualified pipeline for fiscal year 2026 of $53.4 billion [35][36] - The book-to-bill ratio for the quarter was 0.71 times, in line with historical averages, while the trailing twelve-month book-to-bill ratio was 1.39 times, above the trailing five-year average of 1.28 times [35][36] Company Strategy and Development Direction - The company is focusing on restructuring its civil business to return to growth rapidly after an adjustment period, while also positioning itself to lead in outcome-based opportunities [23][42] - The Vault strategy, which emphasizes velocity, leadership, and technology, aligns with government changes and aims to enhance mission acceleration and efficiency [18][26] - The company is committed to investing in advanced technologies, particularly AI, and strengthening partnerships with technology firms to drive innovation [20][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the federal government is rethinking agency missions and looking for ways to reduce spending and increase efficiency, which has led to a slowdown in civil procurement [10][11] - The defense and national security portfolio is expected to continue growing, driven by the injection of AI and commercial technology into missions [11][12] - Management expressed optimism about future opportunities, particularly in AI and advanced technology, despite the challenges in the civil business [26][45] Other Important Information - The company plans to deploy $700 million to $800 million in free cash flow for fiscal year 2026, with expectations of a meaningful reacceleration in the second half of the year [44][45] - The board of directors approved a quarterly dividend of 55 cents per share, payable on June 27 [41] Q&A Session Summary Question: How does the company manage the impact of unpredictable descoping and cancellations? - Management highlighted the strength in defense and intelligence sectors, while acknowledging a reset in the civil business, which is expected to be a one-time adjustment [50][51] Question: What are the expectations for the multiyear growth environment? - Management indicated that the civil business has undergone most reviews positively, while defense spending is expected to increase, particularly in Indo-Pacific and homeland defense [58][59] Question: How does the company plan to invest in commercial terms in defense? - Management emphasized the importance of partnerships with commercial technology firms and the ability to co-create solutions that meet mission needs [85][86] Question: What is the company's strategy regarding share repurchases and capital deployment? - Management confirmed a commitment to share repurchases and strategic investments, particularly in venture capital to support technology advancements [64][66] Question: How does the company view its branding and public perception? - Management acknowledged the challenges of being a market leader in media coverage but emphasized efforts to improve communication and clarify the company's positioning as an advanced technology firm [90][92]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company achieved over 12% revenue growth, nearly all organic, with adjusted EBITDA increasing 12% to $1,315 million, yielding an adjusted EBITDA margin of 11% [30][31] - Adjusted diluted earnings per share grew over 15%, driven by increased profitability and a lower share count, with diluted earnings per share at $1.52, a 55% increase year over year [38][39] - Free cash flow for the quarter was $194 million, resulting from $218 million of cash from operations, less $24 million of CapEx [39] Business Line Data and Key Metrics Changes - The defense and intelligence businesses saw significant growth, with revenue up 145% year over year, while the civil business experienced flat revenue in Q4 and is expected to decline in the low double digits in FY 2026 [33][35] - The AI business grew over 30% year over year to approximately $800 million, indicating strong demand and increasing integration into government operations [18][19] Market Data and Key Metrics Changes - The company ended the fiscal year with a record year-end backlog of $37 billion, up 15% year over year, and a qualified pipeline for FY 2026 of $53.4 billion [35][36] - The book-to-bill ratio for the quarter was 0.71 times, in line with historical averages, while the trailing twelve-month book-to-bill ratio was 1.39 times, above the trailing five-year average of 1.28 times [35] Company Strategy and Development Direction - The company is restructuring its civil business to return to growth rapidly after a reset period, while focusing on capturing major outcome-based opportunities [22][23] - The Vault strategy, emphasizing velocity, leadership, and technology, aligns with government changes, particularly in AI and advanced technology [17][24] Management's Comments on Operating Environment and Future Outlook - Management noted a near-term disruption in the civil business due to government spending reductions and procurement slowdowns, but expressed optimism about growth opportunities in defense and intelligence sectors [10][29] - The outlook for FY 2026 anticipates revenue between $12 billion and $12.5 billion, with adjusted EBITDA in the range of $1,315 million to $1,370 million, maintaining an adjusted EBITDA margin of about 11% [42] Other Important Information - The company plans to make targeted cost and headcount reductions to match anticipated demand, with an expected 7% reduction in staff concentrated in the civil business [12][37] - The board of directors approved a quarterly dividend of 55¢ per share, payable on June 27, reflecting a strong balance sheet and commitment to shareholder value [41] Q&A Session Summary Question: How does the company manage the impact of unpredictable descoping and cancellations? - Management highlighted the dual dynamics of a reset in the civil business and continued strength in defense and intelligence, indicating a proactive restructuring to position for growth [47][48] Question: What are the expectations for the multiyear growth environment, particularly in defense and civil? - The company noted a significant increase in defense spending and a focus on technology integration, while the civil business is undergoing a reset with positive reviews of their technology [55][56] Question: How does the company plan to address the low double-digit decline in the civil business? - Management indicated that the civil business has undergone most reviews positively, and they expect growth to resume as new opportunities arise in the second half of the fiscal year [68][73] Question: How does the company view its branding and perception in the market? - Management acknowledged being a market leader attracts attention, and they are working to improve communication about their advanced technology capabilities [88][90] Question: What is the outlook for the AI business and its future programs? - The company remains optimistic about its AI business, emphasizing its integration into various missions and the potential for significant growth in the sector [99][100]