Should You Buy Booz Allen Hamilton Stock After Earnings Today?

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By Rob Otman

Booz Allen Hamilton (NYSE: BAH) is a $5.69 billion company today. Investors that bought shares one year ago are sitting on a 29.40% total return. That’s above the S&P 500’s return of 16.85%.

Booz Allen Hamilton stock is beating the market, and it beat quarterly earnings expectations this morning. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics…

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✗ Earnings-per-Share (EPS) Growth: Booz Allen Hamilton reported a recent EPS growth rate of -48.61%. That’s below the information technology sector average of 86.98%. That’s not a good sign. We like to see companies that have higher earnings growth.

✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the information technology sector is 40.82. And Booz Allen Hamilton’s ratio comes in at 21.93. The company is trading at a better value than many of its competitors.

✗ Debt-to-Equity: The debt-to-equity ratio for Booz Allen Hamilton stock is 274.52%. That’s above the information technology sector average of 53.37%. That’s not a good sign. Booz Allen Hamilton’s debt levels should be lower.

✗ Free Cash Flow per Share Growth: Booz Allen Hamilton’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.

✗ Profit Margins: The profit margin of Booz Allen Hamilton comes in at 3.96% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Booz Allen Hamilton’s profit margin is below the information technology average of 10.45%. So that’s a negative indicator for investors.

✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Booz Allen Hamilton is 52.97%, and that’s above its sector average ROE of 46.95%.

Booz Allen Hamilton stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold With Caution.

Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more

Source:: Investment You

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