BOOZ ALLEN HAMILTON HOLDING CORPORATION (BAH): what the price assumes

boothcheck covers BOOZ ALLEN HAMILTON HOLDING CORPORATION (BAH) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-08-31 · Source: https://boothcheck.com/report/BAH

Headline

FieldValue
TickerBAH
CompanyBOOZ ALLEN HAMILTON HOLDING CORPORATION
Sector / IndustryIndustrials
Current price$75.24/sh
CompositionCost-reimbursable 59% / Time-and-materials 22% / Fixed-price 19%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)2.2%
Operating margin today9.5%
Margin compression (value-band)-7.3pp
Multiple paid12x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.8% sits below it).

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.85σ
cohort percentile (of 225 peers)11

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.08x5expensive
Earnings1.18x5expensive
Relative0.73x3justifies
Growth1.52x4expensive

Families that justify the price: Asset, Earnings, Relative Families that call it expensive: Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$72.501.04xyesFCF base $1.1B, growth -7% (input: historical growth), terminal g 0.5%, WACC 7.6%, 5yr projection
DCF Exit MultipleGrowth$87.750.86xyesExit EV/EBITDA: 8.4x / 10.4x / 12.4x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$103.210.73xyesP/E 18x (static sector reference · 2026-04), scenarios: 15.2x / 18.0x / 20.8x (bear / base = reference held flat / bull), EV/EBITDA 12x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$20.013.76xyesStage 1: -13% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$69.921.08xyesBV/sh $9.99, ROE (TTM) 64.7%, ke 9.3%
Two-Stage Excess ReturnAsset$263.010.29xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$37.552.00xyesRev $11.1B, growth -7% (input: historical growth; tapered), Terminal P/S: 0.7x / 0.8x / 0.9x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$51.541.46xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.94B × (1−21%) / WACC 7.6% → EPV (no growth)
Residual IncomeAsset$115.400.65xyesBV $9.99 + 5yr PV of (ROE (TTM) 64.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$37.841.99xyes√(22.5 × EPS $6.37 × BVPS $9.99) — Graham's conservative floor
EV/EBITDA RelativeRelative$91.760.82xyesEBITDA $1.22B × sector EV/EBITDA 12.0x
FCF YieldEarnings$70.051.07xyesFCF $1116.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$63.671.18xyesSBC-adj FCF $1.04B (FCF $1.12B − SBC $0.07B) capitalized at Kₑ
Ben Graham FormulaEarnings$5.3414.09xyesEPS $6.37 × (8.5 + 2×-5.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$6.0012.54xyesBV $9.99 × (ROIC 4.5% / WACC 7.6%)
P/Sales SectorRelative$230.560.33xyesRevenue $11.09B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$68.861.09xyesEPS $6.37 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Booz Allen Hamilton (consolidated)operatingenterprise12.0B reported-currency—withheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$3.4b
Net debt / NOPAT (after-tax)4.08x
Net debt / operating income (pre-tax)3.22x
Share count CAGR (buyback)-2.5%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

At roughly eleven times company-wide operating income, the market has stopped asking what growth it is paying for. That level sits below what even a steady five percent annual decline in operating profit would warrant, which is a specific and unusual thing for a market to conclude about a firm with 31,500 employees embedded across the U.S. federal government. The question is whether the decline that is priced in is the decline that is coming.

The order book says otherwise. Backlog reached $38.2 billion at the end of fiscal 2026, more than three times a full year of revenue, with a trailing twelve-month book-to-bill of 1.1x. Bookings above billings means the pipeline grew while the revenue line shrank. That combination is either an early signal of recovery or an accounting artifact of contracts that never convert, and the distinction is the whole investment case.

What sits behind those contracts matters. Booz Allen's core defense customers, per the 10-K, include all six branches of the U.S. military, the Office of the Secretary of Defense, and the Joint Staff, and the firm positions itself around applied artificial intelligence, to help deter adversaries and ensure readiness across all domains. The company has been building product rather than only selling hours: it describes Vellox, our AI-native cyber product suite, pairing automation with trained models. Selling software to an agency is a structurally better business than selling consultants to one, and the shift is visible in what the filing chooses to describe.

The contract mix explains why the profitability looks modest and why that is less alarming than it appears. Cost-reimbursable work, 59% of revenue, pays documented costs plus a fee, with time-and-materials adding another 22% of the total and fixed-price work the remaining 19%. The upside is capped by design; so is the downside. A trailing operating margin near 9.3% is therefore not evidence of a weak business. It is the arithmetic of a revenue base where most of the dollars are pass-through costs, and it puts the firm in line with CACI at 9.3% and within reach of LDOS at 12.0%.

Guidance is where the disagreement between the price and the operator is sharpest. Management has guided fiscal 2027 revenue to $11.2 billion to $11.7 billion, adjusted EBITDA, its own defined measure, to $1.24 billion to $1.29 billion, and free cash flow to $825 million to $925 million. Against a market value of 8.8 billion dollars, the cash generation implied by the bottom of that range is substantial. Management has also earned some benefit of the doubt on forecasts: since 2011 guidance has been raised on 15 separate occasions and reaffirmed on 19 further occasions, with no cuts recorded.

The bear says the customer is shrinking and the backlog will not convert. Fair. The bull answer is not that federal spending accelerates. It is that at this multiple, a business generating this much cash from a three-year order book does not need it to.

Bear Case

A consulting firm exists to be hired, and Booz Allen's dominant customer has spent the recent past deciding it needs fewer consultants. That sentence, not any ratio, is the bear case. Everything else is evidence.

The evidence starts in the company's own annual report, which describes an environment in blunt terms: In our recent experience, the slowed procurement environment and reductions in contract value have had a negative effect on our ability to convert backlog to revenue as of March 31, 2026. It goes further, disclosing that we remain in ongoing discussions with various U.S. government departments and agencies in relation to cost reductions and other potential contract modifications. Those are not risk-factor boilerplate. They are a company saying its customer is actively renegotiating what it already agreed to pay.

The revenue line has followed. Fourth-quarter fiscal 2026 revenue fell 6.4% to $2.8 billion, and excluding billable expenses it fell 6.8% to $1.9 billion. Headcount stood near 31,500 at the end of March 2026. In a business where labour is the product, a shrinking revenue base and a large professional workforce is a margin problem that arrives with a lag, because people cannot be sized down as fast as contracts can be modified.

Structurally, the customer holds nearly all the cards, as the 10-K spells out. Government contracts allow the client to terminate existing contracts, with short notice, for convenience as well as for default and to reduce orders under or otherwise modify contracts. Add the appropriations backdrop the filing describes, where funding for the government's own fiscal 2026 was delayed, with Congress enacting partial appropriations, and the revenue base depends on a political process with no contractual obligation to be timely.

The peer set shows this is not uniform, which weakens the case that it is purely cyclical. CACI grew revenue 9.6% and reports total backlog of $31.4 billion, compared with $31.6 billion a year ago with roughly 75% of revenue from defense-related customers. LDOS grew 2.3% at a 12.0% operating margin. SAIC shrank 2.9%. Booz Allen is on the wrong side of a group where some competitors are still growing, which points at share loss or mix rather than a rising tide going out.

The balance sheet limits the room to be patient. Net debt runs about 3.2 billion dollars, near 3.03 times operating profit, against a business whose operating profit is the thing under pressure. Book value per share is small because years of repurchases have consumed it, so there is no asset cushion under the equity. Roughly 184 million dollars of interests held outside the operating business bound the downside barely at all against an 8.8 billion dollar market value.

Which brings the valuation question round the right way. Peer multiples do say the shares are cheap. But the methods that start from what the business is currently earning and project it forward land below today's price, not above it, because they extrapolate the trajectory rather than the multiple. A stock can be inexpensive against its sector and still be expensive against its own future. That is the specific risk here.

Valuation

The most useful thing about this price is what it refuses to assume. At about eleven times company-wide operating income, the market is not underwriting growth at all. It has moved past that question entirely: the level sits below what even a five percent a year decline in operating profit would warrant. That is a boundary rather than a forecast, and it says the market has concluded the operating profit stream shrinks from here and is pricing the pace, not the direction.

The methods split in a pattern that is unusual and worth reading carefully. Peer multiples land well above today's price, and the asset-based approaches land essentially on top of it. The earnings-power methods, by contrast, sit below: the price is about 20% above where that family centres, and about 26% above where the forward cash-flow methods centre. The reason is mechanical. Applying a sector multiple to current results asks what comparable firms trade at. Projecting the business forward asks what happens if the revenue trend continues, and the trend fed into those forward models is negative. One family is pricing the peer group; the other is pricing the trajectory.

That gap is the entire debate, expressed in arithmetic. If the sector multiple is right, the shares are cheap. If the trajectory is right, they are not.

The contract mix frames what could actually move. Cost-reimbursable work makes up 59% of revenue, time-and-materials 22%, and fixed-price the remaining 19%. That structure caps margin expansion, so the path to higher operating profit runs through volume rather than pricing, which makes backlog conversion the single variable that matters. Backlog stood at 38.2 billion dollars against 11.2 billion of revenue with a book-to-bill of 1.1x, while the 10-K reports that converting it has become harder.

On profitability the cohort says the margin is normal and the direction is not. A trailing operating margin near 9.3% matches CACI exactly and sits between SAIC at 7.9% and LDOS at 12.0%. What separates Booz Allen from CACI is not margin but growth, since CACI's revenue rose 9.6% while this one fell.

Solvency sets the boundary on patience rather than on value. Net debt runs about 3.2 billion dollars, near 3.03 times operating profit, and the share count has fallen about 2.5% a year over the four years to the end of 2025. Management guided fiscal 2027 free cash flow to a range of $825 million to $925 million, which against that debt load is the number that keeps the balance sheet from becoming the story.

The multiple has already conceded that this business gets smaller. What it has not conceded is how much smaller, and the filings do not answer that.

Catalysts

Fourth-quarter and full-year fiscal 2026 results, reported May 22, 2026 for the year ended March 31, 2026, confirmed the contraction. Quarterly revenue fell 6.4% to 2.8 billion dollars, and revenue excluding billable expenses fell 6.8% to 1.9 billion dollars. Full-year revenue came in at 11.2 billion dollars, with headcount near 31,500 at year end. Quarterly net income of 205 million dollars was up 6.2% year over year, so profitability held while the top line gave way.

The order book moved in the opposite direction from revenue. Backlog reached $38.2 billion with a trailing twelve-month book-to-bill of 1.1x, meaning the company booked more work than it billed over the year. Whether that converts is the open question, and the 10-K is candid that conversion has slowed. Backlog and conversion rate are therefore the two disclosures to read first in each of the next several quarters.

Guidance for fiscal 2027 sets the bar management is willing to defend: revenue of $11.2 billion to $11.7 billion, adjusted EBITDA, a company-defined measure, of $1.24 billion to $1.29 billion at a margin around 11%, adjusted diluted earnings per share of $6.00 to $6.35, and free cash flow of $825 million to $925 million. The low end of the revenue range is flat against fiscal 2026. Against a track record of 15 guidance raises and 19 reaffirmations since 2011, a guide to flat revenue is itself a statement about the environment.

Peer Cohorts (Per Segment, With Filing Citations)

Booz Allen Hamilton (consolidated) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q4 fiscal 2026 results, May 22, 2026

View the full interactive BAH report on boothcheck