Booz Allen Hamilton Holding Corp Stock Downgraded (BAH)
Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK (TheStreet) -- Booz Allen Hamilton (NYSE:BAH) has been downgraded by TheStreet Ratings from hold to sell. The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and poor profit margins.
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- BAH has underperformed the S&P 500 Index, declining 6.93% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for BOOZ ALLEN HAMILTON HLDG CP is rather low; currently it is at 22.80%. Regardless of BAH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.30% trails the industry average.
- BOOZ ALLEN HAMILTON HLDG CP has improved earnings per share by 16.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, BOOZ ALLEN HAMILTON HLDG CP increased its bottom line by earning $1.70 versus $0.32 in the prior year. For the next year, the market is expecting a contraction of 4.7% in earnings ($1.62 versus $1.70).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.2%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.94, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, BAH has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity needs.
-- Written by a member of TheStreet Ratings Staff
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