Why Booz Allen Hamilton Stock Fell Even as the Market Rallied Today

Core Viewpoint - Booz Allen Hamilton's shares declined significantly following the announcement of $5.1 billion in cuts from the Department of Defense budget, raising concerns about the company's reliance on government contracts [1][2]. Group 1: Financial Impact - The Department of Defense announced $5.1 billion in budget cuts, with $1.8 billion specifically allocated to consulting companies, including Booz Allen [2][3]. - Booz Allen's stock has already decreased by 43% from its pre-election all-time highs, suggesting that some negative expectations may already be reflected in the stock price [3][4]. Group 2: Company Performance - Over the past 12 months, Booz Allen reported $11.8 billion in revenue, growing at a double-digit rate, and had a backlog of $39.4 billion as of January [4]. - The recent cuts, while negative, represent a small fraction of the company's overall business, indicating potential resilience [4]. Group 3: Valuation Perspective - Booz Allen's stock is currently trading at around 16 times earnings, which is lower than the average in the low 20s over the past decade, suggesting it may present a value opportunity [5].