Why Booz Allen Hamilton (BAH) Stock Is Down Today

NEW YORK (TheStreet) -- Booz Allen Hamilton (BAH) was falling 9.1% to $22.20 Wednesday after not announcing a special dividend, and despite positive quarterly earnings.

For the fiscal fourth quarter Booz Allen Hamilton reported earnings of 33 cents a share, beating analysts' estimates of 31 cents a share by 2 cents. Revenue fell -9.4% from the year-ago quarter to $1.4 billion, in-line with the $1.4 billion in revenue predicted by analysts surveyed by Thomson Reuters.

Despite the positive results investors were disappointed by the lack of a special dividend according to a note from Wells Fargo. Booz Allen Hamilton previously issued a special dividend to its shareholders, but didn't announce a new one, saying special dividends are now secondary priority behind acquisitions.

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TheStreet Ratings team rates BOOZ ALLEN HAMILTON HLDG CP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BOOZ ALLEN HAMILTON HLDG CP (BAH) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, BAH's share price has jumped by 51.57%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BAH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 1562.58% to $152.73 million when compared to the same quarter last year. In addition, BOOZ ALLEN HAMILTON HLDG CP has also vastly surpassed the industry average cash flow growth rate of -20.84%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 16.3%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • BOOZ ALLEN HAMILTON HLDG CP's earnings per share declined by 18.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, BOOZ ALLEN HAMILTON HLDG CP reported lower earnings of $1.45 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.45).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the IT Services industry and the overall market, BOOZ ALLEN HAMILTON HLDG CP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: BAH Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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