Defense IT specialist Booz Allen Hamilton (BAH -0.57%) easily surpassed Wall Street expectations for the quarter and raised full-year guidance. Investors are cheering the news, sending Booz shares up 13% as of 10:45 a.m. ET.
A broad-based beat
Booz Allen Hamilton provides technology and IT services to military and civil government customers, with a large presence in the intelligence community. The company earned $1.81 per share in its fiscal second quarter ending Sept. 30 on sales of $3.15 billion, topping Wall Street's $1.49 per share on revenue of $2.97 billion estimate.
Revenue was up 18% year over year, and operating income more than doubled. The sales number did benefit from the successful resolution of an audit of claimed costs. Without that benefit, revenue would have been up about 13%.
"Our operational momentum drove excellent performance in the second quarter, and we are on track to exceed our multi-year goals," CEO Horacio Rozanski said in a statement.
Is Booz Allen a buy?
Booz reported a book-to-bill ratio of 2.61 for the quarter, meaning that for every $1 billed out in the quarter, the company booked about $2.61 in future revenue. That's a great indication of future growth, with the company now boasting a backlog of about $41.25 billion in future business.
The company raised its full-year fiscal 2025 net cash from operations forecast by $100 million, to $925 million to $1.025 billion. Booz also raised its full-year earnings guidance by $0.30 per share at the low end to $6.10 to $6.30 per share, compared to Wall Street's $6-per-share consensus estimate.
Defense billings tend to come in fits and starts, and investors need to be prepared for choppy quarters up ahead. But Booz Allen is a company with a reliable growth trajectory and better-than 50% gross margins, trading at less than 2.3 times sales.
For those intrigued by defense investing, Booz Allen Hamilton deserves consideration.
