Why Booz Allen Hamilton Shares Popped

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 Booz Allen Hamilton (NYSE: BAH  ) jumped as much as 10% today after beating estimates in its quarterly reports and raising its dividend.

So what: The consulting firm said EPS came in $0.40 a share, $0.03 better than analyst estimates, while revenue of $1.55 billion also topped expectations of $1.51 billion, though the top line only improved 0.3%. CEO Ralph Schrader said he was "proud to have increased adjusted earnings for the year, demonstrating demand for our services and our ability to manage our business well despite a challenging market environment." Though the federal budget has come under pressure, he said the company is winning new work from many departments. Booz Allen projected EPS guidance of $1.55-$1.65 for the fiscal 2014, ahead of estimates at $1.50, but also sees a slight decline in revenue. The company raised its quarterly dividend 11% to $0.10 a share, good for a yield of 2.2%.

Now what: While the report was better than expected, there are still plenty of reasons to be concerned about Booz Allen Hamilton going forward, as spending on consultants is a huge part of the federal budget and one that seems due for increased scrutiny, as consultants generally cost more than full-time federal employees. The declining revenue is a worrisome sign, and the projected EPS is essentially flat as well. The stock is reasonably priced, but, still, it seems there are better places to put your money in this record market.

Don't miss the next update on Booz Allen Hamilton. Add the company to your Watchlist right here.


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