BAH - Embedded Expectations Analysis - 2019 07 24
Booz Allen Hamilton Holding Corporation (BAH:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Earnings, with a 21.4x Uniform P/E. However, even at these levels, market expectations are for declining profitability, and management appears concerned about margins, growth, and their ability to invest in new, profitable business segments.Specifically, management appears concerned about their ability to continue investing in new business lines, and they may be downplaying concerns about the cost-plus nature of their contracts. Moreover, they may be concerned about the economics of new business lines such as Artificial Intelligence, and they may be exaggerating expectations for growth and margin expansion in their US operations. Additionally, they may lack confidence in their ability to grow EPS to reach their 2021 goal and to maintain current EBITDA margin levels.
Booz Allen Hamilton Holding is a holding company. The company provides management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber knowledge to U.S. and international governments, corporations, and non-profit organizations. The company's services are: Consulting, which focuses on solving client problems and developing mission-oriented solutions; Analytics, which includes decision analytics, automation, and data science solutions; Digital Solutions, which develops, designs, and implements solutions; Engineering, which delivers engineering services and solutions; and Cyber, which focuses on active prevention, detection, and cost effectiveness.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.