Analytics Firm Booz Allen Hamilton Poised To Grow Well Into The Future

Summary

• Booz Allen Hamilton has seen its stock price fall in recent weeks and that drop could be creating a buying opportunity.
• The company has seen earnings grow at an above-average pace in recent years and it has a high return on equity.
• Sentiment toward the stock is more bearish than it is for the average stock based on analysts rating and the put/call ratio.

Predictive analytics is one of the most intriguing industries to me and I see the field continuing to grow and grow. The extreme growth in computing capabilities over the last four or five decades has put more and more information at our fingertips. But that information is only useful if we know how to interpret it and how to make decisions going forward. This is where I see the field of predictive analytics headed-helping businesses make better decisions toward marketing, production, pretty much all aspects of business.

I recommended an analytics firm to my subscribers last week, but I also considered Booz Allen Hamilton (NYSE:BAH) when I made that recommendation. Both companies should grow well in to the future, but let's focus on Booz Allen Hamilton for now.

The company has seen strong earnings growth over the last few years with an annual growth rate of 23% per year. When the company reported fiscal third quarter results last month, it showed 30% growth over fiscal Q3 2020. Analysts expect earnings to grow by 20% for fiscal 2021 as a whole.

Revenue has grown at a slower rate, but it has grown never the less. The annual growth rate over the last three years is 10% and it increased by 3% in the third quarter. Analysts are looking for revenue growth of 5.6% in 2021 and 6.0% in 2022. Looking out beyond 2021, I would like to see greater revenue growth from BAH.

One particular statistic where Booz Allen Hamilton is well above average is its return on equity. The current ROE is 58.6%. The other management efficiency indicators aren't as high unfortunately. The profit margin is at 7.3% and the operating margin is at 9.3%. The current valuations are just a little below average with a trailing P/E of 21.1 and a forward P/E of

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.