BAH - Embedded Expectations Analysis - 2021 06 30
Booz Allen Hamilton Holding Corporation (BAH:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 19.2x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may be concerned about ramping revenue and margin growth, civil business growth opportunities, and digital innovationSpecifically, management may lack confidence in their ability to ramp their organic revenue and margin growth and maintain their win rates for re-compete contracts. In addition, they may have concerns about their capital allocation strategy and lingering pandemic-related headwinds persisting through 2022. Furthermore, management may lack confidence in their ability to capitalize on growth opportunities in the civil business and execute their near- and mid-term priorities. Finally, they may be exaggerating the quality of their labor flexibility conversations with clients and their digital innovation capabilities
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.
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