BOOZ ALLEN HAMILTON HOLDING CORPORATION (BAH): what the price requires
The current priced-in claim for BOOZ ALLEN HAMILTON HOLDING CORPORATION (BAH) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/BAH
Headline
| Field | Value |
|---|---|
| Ticker | BAH |
| Company | BOOZ ALLEN HAMILTON HOLDING CORPORATION |
| Current price | $64.52/sh |
| Composition | Cost-reimbursable 59% / Time-and-materials 22% / Fixed-price 19% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 4.2% |
| Operating margin today | 9.3% |
| Margin compression implied | -5.1pp |
| Multiple paid | 10x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration 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 6.6% sits below it).
Reconcile: at the x-ray's 9.3% required return this reads ~-3.8%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.85σ |
| cohort percentile (of 225 peers) | 7 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. 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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.85x | 5 | justifies |
| Earnings | 1.04x | 5 | expensive |
| Relative | 0.61x | 5 | justifies |
| Growth | 1.11x | 4 | expensive |
Families that justify the price: Asset, Earnings, Relative, 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=19)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $60.46 | 1.07x | yes | FCF base $1.0B, growth -6% (input: historical growth), terminal g 0.5%, WACC 7.6%, 5yr projection |
| DCF Exit Multiple | Growth | $74.00 | 0.87x | yes | Exit EV/EBITDA: 7.4x / 9.4x / 11.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $107.18 | 0.60x | yes | P/E 18x (static sector reference · 2026-04), scenarios: 15.2x / 18.0x / 20.8x (bear / base = reference held flat / bull), EV/EBITDA 12x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $56.03 | 1.15x | yes | Stage 1: 10% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $75.82 | 0.85x | yes | BV/sh $9.11, ROE (TTM) 77.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $356.51 | 0.18x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $33.16 | 1.95x | yes | Rev $11.2B, growth -6% (input: historical growth; tapered), Terminal P/S: 0.6x / 0.7x / 0.8x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $82.80 | 0.78x | yes | EPS $6.90, growth 10% (input: historical EPS growth), PEG=0.90 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $61.83 | 1.04x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.92B × (1−9%) / WACC 7.6% → EPV (no growth) |
| Residual Income | Asset | $126.43 | 0.51x | yes | BV $9.11 + 5yr PV of (ROE (TTM) 77.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $37.60 | 1.72x | yes | √(22.5 × EPS $6.90 × BVPS $9.11) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $90.15 | 0.72x | yes | EBITDA $1.20B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $56.60 | 1.14x | yes | FCF $951.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $50.45 | 1.28x | yes | SBC-adj FCF $0.88B (FCF $0.95B − SBC $0.07B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $167.28 | 0.39x | yes | EPS $6.90 × (8.5 + 2×10.2%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $6.31 | 10.23x | yes | BV $9.11 × (ROIC 5.3% / WACC 7.6%) |
| P/Sales Sector | Relative | $231.09 | 0.28x | yes | Revenue $11.22B × sector P/S 2.5x |
| PEG Fair Value | Relative | $105.71 | 0.61x | yes | EPS $6.90 × (PEG 1.5 × growth 10.2% (input: historical EPS growth)) → PE 15.3x |
| Earnings Yield | Earnings | $74.59 | 0.86x | yes | EPS $6.90 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $3.2b |
| Net debt / NOPAT (after-tax) | 3.34x |
| Net debt / operating income (pre-tax) | 3.03x |
| Share count CAGR (buyback) | -2.5% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Booz Allen sells consulting and technology to the U.S. government, and the market is treating it as a casualty of federal spending cuts, yet the company ended fiscal 2026 with a record backlog near $38 billion driven by defense, intelligence, cyber, and AI work.
- The biggest risk is concentration: nearly all revenue comes from the federal government, and the company's own filing warns that "cost-cutting initiatives and other efforts to reduce U.S. government spending" could reduce or delay its funding, a risk that is no longer hypothetical after Treasury terminated its contracts in January 2026.
- What moves the stock next is the split between the shrinking civil business, guided to a low-double-digit decline this year, and the resilient national-security book; full-year EPS guidance of $6.20 to $6.55 frames the reset.
Bull Case
The counterintuitive fact sits right at the top of the story: a company the market is pricing as a victim of the federal spending crackdown just posted a record backlog. Booz Allen ended fiscal 2026 with roughly $38 billion of backlog, built on accelerating demand across national security, cybersecurity, and AI-native offerings. That is the number that does not fit the narrative. The headlines are about DOGE, contract cancellations, and 2,500 job cuts; the order book is at an all-time high. Backlog is funded and unfunded future work, and a record level says the government is still committing dollars to the kind of mission work Booz Allen does, even as it cuts elsewhere.
The reason is that not all federal spending is equal. The cuts are landing on the civil side, the agency-modernization and administrative consulting that DOGE was built to target, and that segment is guided to decline low double digits this year. But defense, intelligence, and cyber are different: they are mission-critical, classified in many cases, and tied to national-security priorities that survive budget fights. Booz Allen's filing is direct that its franchise rests on agency relationships, warning that if its "reputation or relationships with U.S. government agencies is impaired, our revenue and operating profits could materially decline", which is the flip side of a real asset: those relationships, where they hold, are durable and hard to replicate. The work that is growing is the work that is hardest to cut.
The economics are unusually clean for a consulting firm. Booz Allen earns a return on equity above 70%, generates roughly $951 million of free cash flow, and converts most of its earnings into cash because it sells people's time, not capital-intensive products. The company has been retiring stock, with the share count down about 2.5% a year, and the price asks very little: at about 11 times operating income, the market is paying a multiple that sits below what even a steady decline in operating profit would warrant. The bull case is not that the federal headwind is fake. It is that the price has already extrapolated the civil-side cuts across the whole company, while the larger national-security book is growing into a record backlog the market is refusing to credit.
Bear Case
The structural truth a holder has to face is that Booz Allen has one customer. Substantially all of its revenue comes from the U.S. government, and that concentration is not a footnote, it is the business model. When that customer decides to spend less, there is no commercial book to pivot to. The filing states the risk in plain language: among the factors that could hurt results are "cost-cutting initiatives and other efforts to reduce U.S. government spending, which could reduce or delay funding for orders for services". In fiscal 2026 that risk stopped being a disclosure and became a fact. The Treasury Department terminated its contracts with Booz Allen in January 2026, the civil segment is guided to a low-double-digit decline, and the company announced 2,500 job cuts to match the lower demand. The full-year EPS guidance of $6.20 to $6.55 is below the trailing figure, which is the company telling you earnings are resetting down, not up.
The record backlog is less reassuring than it looks. Backlog includes unfunded work and contract ceilings that the government is not obligated to spend, and Booz Allen's own filing concedes it "historically ha[s] not realized all of" its backlog. In an environment where procurement is slowing, contracts are under review, and agencies are being told to cut consulting spend, the gap between backlog and recognized revenue widens. A record backlog that converts more slowly is a softer asset than a record backlog in a growth environment.
The debt sharpens the downside. Booz Allen carries about $3.2 billion of net debt, more than three times trailing operating income, against a thin equity base. That leverage is manageable when revenue is growing and cash is flowing, but it is a constraint if the federal budget pressure deepens and free cash flow compresses while the company is also funding severance for the job cuts. The market is paying only about 11 times operating income precisely because it sees the concentration risk as live: this is a single-customer business whose customer is actively trying to spend less. The bear case is not that Booz Allen is a bad company. It is that a great consulting franchise pointed entirely at a shrinking federal discretionary budget is exposed to a force it cannot diversify away from, and the cheap multiple is the market correctly pricing that exposure rather than offering a bargain.
Valuation
The price is doing something unusual: it is pricing in decline. At about 11 times operating income, Booz Allen trades below what even a 5% annual drop in operating profit would warrant. The market has looked at the DOGE cuts, the civil-segment weakness, and the Treasury contract termination and concluded the whole company is shrinking. That is the bet embedded in the price, and the question is whether it overshoots, because the larger national-security book is growing while the cuts land on the smaller civil side.
The method disagreement is wide and tilts cheap. The peer-multiple lens at an 18 times earnings sector multiple lands far above the price, the growth-adjusted earnings read calls the stock undervalued, and the exit-multiple cash-flow and dividend-discount methods land near or modestly above the price. Only the methods that extrapolate the recent negative revenue trend (the perpetual-growth cash flow built on a roughly 6% historical decline) sit close to or below today's level. In plain terms, the methods that assume the decline continues defend the low price, and the methods that credit the company's earnings power and peer positioning say it is worth meaningfully more. The spread is the whole debate: pay 11 times for a firm the static methods value far higher, and you are betting the federal-spending decline is cyclical rather than permanent.
Solvency is the one place the bears have firm ground. Net debt of roughly $3.2 billion runs about 3.1 times trailing operating income, with only about $728 million of liquid assets, so the balance sheet has less slack than the strong free-cash-flow generation suggests. The company has used that cash flow to buy back stock, shrinking the share count about 2.5% a year, which lifts per-share value if earnings hold. The most decisive point for the valuation is the segment split: the price treats Booz Allen as one declining government contractor, but the business is really a shrinking civil book attached to a growing national-security book carrying a record backlog, and the gap between those two stories is what a buyer at 11 times operating income is wagering on.
Catalysts
Booz Allen spent fiscal 2026 absorbing the federal spending reset. Management expects the cuts to reduce fiscal 2026 revenue by about 3%, with the civil business declining low double digits amid budget cuts and contracting delays, and the company announced plans to cut roughly 2,500 jobs to align cost with the lower demand. The single sharpest event was the Treasury Department's January 2026 decision to terminate its contracts with the firm, a concrete sign that the DOGE-era procurement pressure is hitting Booz Allen directly rather than in theory.
The offsetting catalyst is the backlog. Booz Allen ended the year with a record backlog of approximately $38 billion, with management pointing to accelerating demand in national security, cyber, and AI-native products. That backlog is the bridge between the current reset and future revenue, and the conversion rate, how fast funded work turns into recognized revenue, is the metric that decides whether the record number is real or optimistic in a slow-procurement environment.
The forward frame is the guidance itself. Full-year EPS guidance of $6.20 to $6.55 sets the bar below the trailing result, so the near-term catalysts are negative by design, and the question is whether the national-security growth stabilizes the company faster than the civil-side cuts drag it down. The next quarterly reports are the cleanest read on which side of that split is winning, with the civil revenue line and the backlog conversion the two numbers to watch.
Peer Cohorts (Per Segment, With Filing Citations)
Booz Allen Hamilton (consolidated) (reported)
- LDOS (Leidos Holdings, Inc.)
- (no filing in the citation store)
- SAIC (Science Applications International Corporation)
- (no filing in the citation store)
- CACI (CACI International Inc)
- (no filing in the citation store)
- VVX (V2X, Inc.)
- (no filing in the citation store)
- G (GENPACT LIMITED)
- (no filing in the citation store)
- FCN (FTI CONSULTING, INC)
- (no filing in the citation store)
- TTEK (TETRA TECH, INC.)
- (no filing in the citation store)
- ACM (AECOM)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
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
Booz Allen fiscal 2026 results, 2026 · Booz Allen fiscal 2026 guidance, 2026 · company financial data · Booz Allen fiscal 2026 results and announcements, 2026 · U.S. Treasury contract termination, January 2026