Booz Allen Hamilton Holding Corp (BAH) Stock Analysis

Booz Allen Hamilton Holding Corp (BAH) Stock Analysis

Overall Grade: F (Concerning)

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Booz Allen Hamilton Holding Corp faces challenges in financial performance that warrant careful analysis.

Key Metrics:

Metric Value Context
ROIC 20.2% Above industry average
FCF Margin 8.2% Healthy cash flow
Debt/Equity 3.8x Elevated debt

Investment Thesis: Strong return on invested capital of 20.2% suggests durable competitive advantages and efficient capital allocation.


What is Booz Allen Hamilton Holding Corp's Profitability and ROIC?

Booz Allen Hamilton Holding Corp generates strong returns on invested capital at 20.2%, indicating efficient capital allocation and competitive advantages. Gross margin of 52.7% with operating margin at 9.2% reflects the company's strong market position.

Key Metrics

Metric Value Rating Interpretation
Return on Invested Capital (ROIC) 20.2% Excellent Strong capital efficiency
Return on Equity (ROE) 80.3% Excellent Efficient use of shareholder equity
Gross Margin 52.7% Excellent Strong pricing power
Operating Margin 9.2% Adequate Moderate operational efficiency

How Strong is Booz Allen Hamilton Holding Corp's Cash Flow Quality?

Booz Allen Hamilton Holding Corp generated $933.0M in free cash flow over the trailing twelve months, representing a 8.2% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 1.2x.

Key Metrics

Metric Value Rating Interpretation
Free Cash Flow Margin 8.2% Adequate Healthy cash generation
Free Cash Flow (TTM) $933.0M Good Positive cash generation
OCF/Net Income 1.2x Excellent High earnings quality
FCF Consistency (8Q) N/A Warning Variable cash flow

What is Booz Allen Hamilton Holding Corp's Financial Health?

Booz Allen Hamilton Holding Corp's debt-to-equity ratio of 3.8x indicates elevated leverage.

Key Metrics

Metric Value Rating Interpretation
Debt to Equity 3.8x Red flag Elevated leverage
Net Cash Position $-3.1B Warning Net debt position

Is Booz Allen Hamilton Holding Corp Stock Overvalued or Undervalued?

Booz Allen Hamilton Holding Corp trades at a P/E of 12.5x, representing a premium to the sector median of N/A. Free cash flow yield of 9.0% offers attractive cash returns.

Key Metrics

Metric Value Rating Interpretation
P/E Ratio 12.5x Adequate Reasonable valuation
EV/Sales 1.2x Excellent Attractive revenue multiple
FCF Yield 9.0% Excellent Attractive cash return
Dividend Yield 2.6% Adequate Growth focus over income

Sector Rankings

Metric Value Percentile vs Median
Return on Invested Capital (ROIC) 20.2% Top 25% 2.5x above
Free Cash Flow Margin 8.2% Top 50% 1.5x above
Gross Margin 52.7% Top 25% 1.6x above
Operating Margin 9.2% Top 50% 1.1x above
Return on Equity (ROE) 80.3% Top 5% 9.0x above
P/E Ratio 12.5x N/A -

Rating Thresholds

Return on Invested Capital (ROIC)

Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.

Rating Range Interpretation
Excellent > 20% Exceptional capital efficiency, strong competitive moat
Good 12% - 20% Above-average returns, sustainable competitive position
Adequate 8% - 12% Around cost of capital, moderate competitive position
Warning 4% - 8% Below cost of capital, value may be eroding
Red flag < 4% Significant capital destruction, fundamental issues

Current: 20.2% (Excellent - Top 25% of sector (median: 8.0%))

Free Cash Flow Margin

The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.

Rating Range Interpretation
Excellent > 20% Strong cash generation, high-quality business
Good 10% - 20% Healthy cash conversion
Adequate 5% - 10% Moderate cash generation
Warning 0% - 5% Thin cash margins, capital intensive
Red flag < 0% Cash burn, potential liquidity concerns

Current: 8.2% (Adequate - Top 50% of sector (median: 5.4%))

Gross Margin

Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.

Rating Range Interpretation
Excellent > 50% Strong pricing power and competitive moat
Good 30% - 50% Healthy margins, differentiated product
Adequate 20% - 30% Moderate margins, competitive industry
Warning 10% - 20% Thin margins, commodity-like business
Red flag < 10% Very thin margins, structural challenges

Current: 52.7% (Excellent - Top 25% of sector (median: 33.4%))

Debt to Equity Ratio

Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.

Rating Range Interpretation
Excellent < 0.3x Conservative leverage, strong balance sheet
Good 0.3x - 0.7x Moderate leverage, healthy financial position
Adequate 0.7x - 1.5x Elevated leverage, monitor closely
Warning 1.5x - 3.0x High leverage, increased financial risk
Red flag > 3.0x Excessive leverage, potential distress risk

Current: 384.4% (Red flag)

P/E Ratio (Price-to-Earnings)

Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.

Rating Range Interpretation
Excellent < 15x Attractively valued, potential opportunity
Good 15x - 25x Fair value for quality company
Adequate 25x - 35x Growth premium, justify with earnings growth
Warning 35x - 50x High expectations priced in
Red flag > 50x or negative Speculative valuation or losses

Current: 12.5x (Adequate)

Free Cash Flow Yield

Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.

Rating Range Interpretation
Excellent > 8% High cash return, potential value opportunity
Good 5% - 8% Solid cash yield
Adequate 3% - 5% Moderate cash return
Warning 1% - 3% Low cash yield, growth expectations
Red flag < 1% Minimal cash return to shareholders

Current: 9.0% (Excellent)


Frequently Asked Questions

Q: What is Booz Allen Hamilton Holding Corp's Return on Invested Capital (ROIC)?

Booz Allen Hamilton Holding Corp (BAH) has a trailing twelve-month Return on Invested Capital (ROIC) of 20.2%. This compares above the sector median of 8.0%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.

Q: What is Booz Allen Hamilton Holding Corp's Free Cash Flow Margin?

Booz Allen Hamilton Holding Corp (BAH) has a free cash flow margin of 8.2%, generating $933.0 million in free cash flow over the trailing twelve months. A FCF margin between 5-10% is typical for capital-intensive businesses.

Q: Is Booz Allen Hamilton Holding Corp stock overvalued or undervalued?

Booz Allen Hamilton Holding Corp (BAH) trades at a P/E ratio of 12.5x, which is above the sector median of N/A. The EV/Sales multiple is 1.2x. Free cash flow yield is 9.0%, which represents an attractive cash return to investors.

Q: Does Booz Allen Hamilton Holding Corp pay a dividend?

Booz Allen Hamilton Holding Corp (BAH) currently pays a dividend yield of 2.6%. Including share buybacks, the total shareholder yield is 10.6%. This yield is moderate, suggesting a balance between income and growth reinvestment.

Q: How much debt does Booz Allen Hamilton Holding Corp have?

Booz Allen Hamilton Holding Corp (BAH) has a debt-to-equity ratio of 3.8x with total debt of $3.9 billion. Net debt position is $3.1 billion.

Q: What is Booz Allen Hamilton Holding Corp's revenue and earnings growth?

Booz Allen Hamilton Holding Corp (BAH) declined revenue by 3.1% year-over-year. Earnings per share increased by 0.4% compared to the prior year. Revenue decline may indicate market challenges or industry headwinds.

Q: Is Booz Allen Hamilton Holding Corp buying back stock?

Booz Allen Hamilton Holding Corp (BAH) repurchased $836.0 million of stock over the trailing twelve months. This represents a buyback yield of 8.0%.

Q: How does Booz Allen Hamilton Holding Corp compare to competitors in Industrials?

Compared to other companies in Industrials, Booz Allen Hamilton Holding Corp (BAH) shows: ROIC of 20.2% is above the sector median of 8.0% (Top 14%). FCF margin of 8.2% exceeds the sector median of 5.4% (Top 37% of sector). Gross margin at 52.7% is 19.3 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Industrials companies with available SEC filings.

Q: What warning signs should I watch for with Booz Allen Hamilton Holding Corp?

Investors in Booz Allen Hamilton Holding Corp (BAH) should monitor these potential warning signs: 1) Debt-to-equity of 3.8x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.


Data Source: Data sourced from 10-Q filed 2025-10-24. TTM metrics as of Q4 2025.

Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.

This analysis is for informational purposes only and does not constitute investment advice.