Booz Allen (BAH Stock) Q3 Earnings Exceed Expectations: Non-GAAP EPS Beats by $0.25, Revenue by $30M

John Smith
  • Booz Allen posted adjusted Q3 EPS of $1.41, well above analyst estimates of $1.16. A major earnings beat.
  • Revenues came in at $2.57 billion, exceeding predictions of $2.52 billion. Surprise revenue outperformance.
  • Booz Allen reaffirmed full-year outlook calling for even stronger growth, indicating sustained business momentum ahead. FY23 guidance remains bullish.

Booz Allen Hamilton (BAH), a management and technology consulting company that works with both government and business clients, shocked investors this week with financial results for the third quarter that were even better than what Wall Street had expected.

The company reported adjusted earnings per share (EPS) of $1.41, which was much higher than the $1.16 that experts had predicted. Booz Allen, on the other hand, made $2.57 billion in quarterly sales, which was much more than the $2.52 billion that was expected.

“Demand for consulting services and solutions, along with great execution by our leadership team, led to our strong third quarter results,” said Horacio Rozanski, President and CEO of Booz Allen. “We had notable contract awards across our markets and mission areas.”

Digging deeper into the results:

  • The consulting business does well: Booz Allen’s main business, consulting, saw its sales rise almost 20% from the same time last year. The section was responsible for most of the new contracts.
  • Strong hiring: The number of workers grew by almost 1,100 in Q3 and shows no signs of slowing down. Booz Allen keeps hiring more people to keep up with rising demand.
  • Higher profits: adjusted EBITDA margins reached 10.4%, which was 40 basis points higher than the rate last year. Gains in business efficiency lead to an increase in the margin.
  • In the quarter, Booz Allen had strong cash flows. It had $273 million in working cash flows and $254 million in free cash flows. This sends a message about financial health.

Why It Matters

The company’s better-than-expected financial success shows that clients like Booz Allen’s consulting model. The company is getting more work from both government and business clients in areas like AI, digital transformation, tech, and other in-demand skills.

Booz Allen, on the other hand, is doing a great job of growing its business while also increasing its profits. This is a good sign because it shows that the company has the power to set prices and use its employees effectively.

The company is also still making a lot of cash, which it uses to pay for growth projects and keep its income. Since the beginning of fiscal year 2014, Booz Allen has quickly raised its bonus by 23% per year.

Looking Ahead

The fiscal 2023 outlook from Booz Allen was confirmed. The company is still aiming for diluted EPS between $4.15 and $4.45, with $4.45 being the middle and $4.29 being the consensus estimate.

Management also thinks that the total backlog will reach $31.2 billion by the end of the fiscal year, with over $7 billion in new contracts already signed.

Investors look to Booz Allen because it has the fastest growth and most consistent performance in its field.

This is especially true when the government IT scene isn’t doing so well. Its best-in-class earnings also give people faith in the name’s high value.

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John Smith is a veteran stock trader with over 10 years of experience in the financial markets. He is a widely followed market commentator known for his astute analysis and accurate predictions. John has authored multiple bestselling books explaining complex market concepts in simple terms for novice investors looking to grow their wealth through strategic trading and long-term investments.
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