Why Booz Allen Hamilton Shares Spiked

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of management and technology consulting firm Booz Allen Hamilton (NYSE: BAH  ) rallied as much as 16% today after reporting better-than-expected fourth-quarter results.

So what: Despite having "Booz" in the name, I assure you no one here is drunk; although you wouldn't know that by the excitement surrounding this company's fourth-quarter report. Attributing its results to organic growth across all government markets, Booz Allen Hamilton reported a 3% rise in revenue to $1.54 billion and $0.44 in adjusted profits. This compared to an adjusted profit of just $0.36 in a year-ago quarter that was laden with one-time charges. In addition, the company forecast flat-to-low-single-digit growth for the first half of the current fiscal year with an expectation of $1.71-$1.81 in annual EPS. That's on the high end of Wall Street's $1.72 consensus.

Now what: As icing on the cake, Booz Allen Hamilton also declared a special $1.50 dividend payable to shareholders on record in late June. This comes on top of the company's already robust 2.4% yield. Although today's results are encouraging, I'm always concerned when a company relies heavily on the government to pay its bills. Even at roughly 10 times current-year earnings, I'm willing to wait on the sidelines for this stock to offer a more attractive valuation.

Craving more input? Start by adding Booz Allen Hamilton to your free and personalized watchlist so you can keep up on the latest news with the company.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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Read/Post Comments (1) | Recommend This Article (4)

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  • Report this Comment On May 30, 2012, at 5:26 PM, matthewluke wrote:

    One of the reasons to like Booz Allen Hamilton is their expansion into domestic-commercial, international-commercial and international-government businesses (after the non-compete agreement, that confined them to US-government consulting, expired 10-months ago).

    So if you are concerned about companies that rely on the government to pay its bills, Booz Allen already moving away from that.

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