Booz Allen Hamilton (BAH) — Company Overview

What They Do

Booz Allen Hamilton is a premier government consulting and technology firm that helps federal agencies solve complex national security and civil challenges. They generate revenue through consulting services, systems integration, and increasingly through outcome-based contracts and proprietary technology products, serving clients like the Department of Defense, intelligence agencies, and civilian government departments.

Investment Thesis

Key Risks

Growth Story

Revenue growth faces near-term pressure with CY26 expected to decline 6.1% to $11.3B before recovering to $11.5B in CY27. The company is pivoting from pure staff augmentation to outcome-based contracting and product sales, with the new Andreessen Horowitz partnership providing up to $400M in venture funding to accelerate this transformation into higher-value technology solutions.

Profitability Profile

BAH demonstrates strong margin discipline with 54.8% gross margins and consistent 10.9% EBITDA margins despite revenue headwinds. The completed $150M cost reduction program positions them for margin expansion in FY2027, while strong free cash flow generation of $248M in Q3 supports capital allocation flexibility and the dividend.

Competitive Position

BAH holds a differentiated position as the largest pure-play government consulting firm with deep national security expertise and top-secret clearances that create high switching costs. Their new partnership with Andreessen Horowitz as a16z's first government technology acceleration partner provides unique access to Silicon Valley innovation, setting them apart from traditional defense contractors like CACI, SAIC, and Accenture Federal.

Recent Momentum

Q3 results showed operational resilience with 14% EPS growth to $1.77 despite revenue challenges from the government shutdown. Management raised EPS guidance while navigating the longest government shutdown in history, demonstrating strong execution capabilities and leading to positive market reception of their strategic pivot toward higher-value technology solutions.

What Wall Street Thinks

Analysts appear cautiously optimistic about BAH's strategic transformation despite near-term revenue headwinds, with the company's ability to maintain margins and grow EPS during a challenging environment garnering respect. The Andreessen Horowitz partnership has generated significant interest as a potential game-changer for government technology contracting.

The Bottom Line

BAH is successfully transforming from a traditional government consultant into a technology-enabled solutions provider, with strong margin discipline and strategic partnerships positioning them for accelerated growth once government funding normalizes.