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 Holding Corporation (BAH 0.32%) fell as much as 13% on Thursday after the company announced fiscal-fourth-quarter results and guidance for the current year that fell short of Wall Street's expectations.

So what: Relative to analysts' estimates, it was strikes across the board for Booz Allen:



Analysts' Consensus Estimate

FQ4 Revenues – MISS

% Surprise

$1.34 billion


$1.40 billion

FQ4 Earnings-per-share* – MISS

% Surprise






Analysts' Consensus Estimate

FY2016 Revenue growth

$5.17 billion – $5.38 billion

$5.45 billion

FY2016 Earnings-per-share*



Sources: Thomson Financial Network, Booz Allen Hamilton

The government contracting market has been difficult. Witness Booz Allen's revenues, which fell 3.7% in its fiscal year 2015 and are expected to remain flat in the fiscal year to March 2016, per the company's guidance (the growth range is (2%) to +2%). That's the major tailwind with regard to profits: Adjusted earnings-per-share fell 2% in fiscal 2015, and the company expects 3% growth in the current fiscal year.

Still, the last quarter did provide some "green shoots" -- it was the fourth consecutive quarter displaying year-on-year improvement in total funded and unfunded backlog. Another silver lining: cash flow (that's one long-term investors ought to like!). Booz Allen generated $274 million in free cash flow in fiscal 2014 -- 114% of adjusted net income.

Now what: Booz Allen's growth prospects are unimpressive, but what it lacks in pizazz, it makes up for in profitability and stability. Yes, the company disappointed with regard to its short-term outlook (reminder: one year is short-term when it comes to corporate performance and equity investing), but with the shares priced at 15 times forward earnings and 16 times cash flow, per research firm Morningstar, they don't look like a bad buy for an investor who measures his expected holding period in years rather than quarters.