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Booz Allen Hamilton Holding Corporation

Booz Allen Hamilton is a management and technology consultant earning most of its revenue from U.S. defense, intelligence, and civil agencies; a policy-driven downturn has cut its shares roughly 65% from their 2024 peak.

From a $186 peak in October 2024, the shares fell about 65% to $59.71 in June 2026 before steadying near $66.
$65.87
Share price
$8.1B
Market cap
$11.2B
FY2026 revenue
$38.2B
Total backlog
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As reported

Five years of statements: a compounder that broke stride in FY2026

FY2022 → FY2026as reported · $
Revenue$11.2B−6%
Operating margin9.2%−2.2pp
Net income$851M−9%
EPS$6.90−5%
Open the full statements →
Revenue peaked at $12.0B in FY2025, then fell to $11.2B; net income eased to $851M.
  • A decade of compounding, then a step down. Revenue roughly doubled from $6.2B in FY2017 to a $12.0B peak in FY2025, before slipping 6% to $11.2B in FY2026 as federal civilian budgets contracted.
  • Margins and cash held up. Operating margin held near 9%, net income was $851M, and reported free cash flow was about $951M — heavy generation on sub-1%-of-revenue capex.
  • The full statements sit in a dedicated tab. Three years of financials plus forward estimates are surfaced explicitly rather than folded into the narrative.
Earnings quality

The 9% earnings ‘hold’ was carried by the tax line, not operations

Income-tax expense
The effective tax rate fell from 23.3% in FY2025 to 1.3% in FY2026.
  • Operating income fell 25%, net income only 9%. Operating income dropped from $1,370M to $1,033M while net income slipped to $851M — the gap sits almost entirely in a $273M tax swing.
  • Anchor on the clean base. Management’s own bridge strips $0.11 of venture gains and $0.50 of non-recurring R&D credit off the $6.51 adjusted EPS to a $5.90 run-rate, below the $6.90 GAAP figure.
  • The counter. The $103M R&D credit is structural and recurs, and FY2027 guides $6.00–$6.35 at a normalized 20–23% tax rate, so the clean base is real rather than a one-off.
Booz Allen's FY2026 net income fell only 9% while operating income fell 25% — a gap bridged by a tax charge that collapsed from $284M (23.3%) to $11M (1.3%) — and the FY2025 base it is measured against was itself inflated by ~$237M of one-time settlement benefits ($122M reserve release + $115M insurance recovery) while the FY2026 result was defended by a 12% workforce cut (~35,800 to ~31,500) and $61M of severance, so the earnings 'resilience' is largely constructed rather than operational.
The cleared moat

The moat holds contract share — but the revenue that share represents is shrinking

Backlog by tier
Of the record $38.2B backlog, funded work is 11% of the total.
  • Share held, scope shrinking. Booz Allen won ~89% of FY2026 recompetes and kept roughly nine in ten held contracts, but management says the work returning carries “shorter periods of performance and smaller scope.”
  • Only 11% is funded. Of the record $38.2B backlog, just $4.3B is funded today; $23.7B sits in priced options that depend on future appropriations.
  • The counter. Priced options have historically converted at high rates for an ~89%-win incumbent, and total backlog still grew ~3% in a down year — 11% funded is normal for work billed as it is performed.
Booz Allen won about 89% of its FY2026 recompetes and kept roughly nine in ten held contracts, but management says the recompetes coming back carry 'shorter periods of performance and smaller scope', and only $4.3 billion (11%) of the record $38.2 billion backlog is funded — with $23.7 billion in priced options dependent on future appropriations — so the moat holds contract share even as the revenue that share represents is structurally shrinking.
Priced-in pessimism

Cheap — but the discount is measured against flattered figures

Headline figures versus a normalized base
MetricHeadlineNormalized
Forward P/E10.5x~11x
FCF yield~11.8%~9%
FY2026 free cash flow$951M~$750M
Earnings base$6.90 GAAP$5.90 clean
Normalizing tax and working capital roughly halves the discount to the pre-2023 norm.
  • Cheap, but less than the headline. On the clean $5.90 base the forward multiple is ~11x, not 10.5x; stripping a $207M billed-receivables release leaves underlying FCF near $750M, a ~9% yield rather than ~11.8%.
  • The counter. Leidos (9.6x) and Maximus (9.5x) carry the same multiple — the market is repricing a Civil-exposed cohort, not singling out one name.
At $65.87 Booz Allen trades at about 10.5x consensus FY2027 earnings and an ~11% free-cash-flow yield, but on management's clean $5.90 earnings base the multiple is ~11x, and stripping a non-repeatable $207 million billed-receivables release leaves underlying FY2026 free cash flow nearer $750 million than the reported $951 million — so the discount to its ~20x pre-2023 norm is measured against tax- and working-capital-flattered headline figures.
Revenue mix

The national-security core grew while the civil side broke

Revenue by client group
Defense plus Intelligence grew ~2% to $7.97B in FY2026; Civil & Commercial fell 22% to $3.25B.
  • Two books, opposite weather. The national-security core (Defense plus Intelligence) grew about 2% to $7.97B, while Civil & Commercial dropped 22% to $3.25B.
  • The mix is now ~71% national security. That core, tied to defense and intelligence missions, carries the durability case; Civil is the swing factor the market is pricing.
Balance sheet

Debt is serviceable; the equity offers no asset cushion

2.6x
Net debt / EBITDA
5.6x
Interest coverage
$2.2B
Total liquidity
−$1.8B
Tangible equity
  • Ruin risk looks low. Net debt of $3.2B is ~2.6x adjusted EBITDA, operating income covers interest 5.6x, and $2.2B of liquidity sits against a nearest large maturity in 2035.
  • But there is no book-value floor. Goodwill and intangibles of $2.9B leave tangible equity around −$1.8B, so the margin of safety is the cash flows, not the balance sheet.
Cash quality

Heavy cash generation, but the annual line is lumpy

Free cash flow
FY2024’s $192M trough was a $377.5M legal settlement paid in cash; FY2026 was lifted by a $207M receivables release.
  • The annual cash line swings hard. Free cash flow fell to $192M in FY2024 — the year a $377.5M settlement was paid — then recovered to about $951M in FY2026.
  • Normalize both ends. Excluding a one-time $207M billed-receivables release, underlying FY2026 free cash flow is nearer $750M; over three years cash converted at ~86% of net income.
Forward estimates

Estimates bracket a shallow trough, not a collapse

Adjusted EPS, reported and estimated
FY2027 guidance is $6.00–$6.35 at a 20–23% tax rate.
  • A dip, then recovery. Adjusted EPS held at $6.51 in FY2025 and FY2026; consensus has FY2027 near $6.29 and FY2028 recovering to about $6.85.
  • Guidance frames the floor. Management guides FY2027 to $6.00–$6.35 — a modest step down if Civil stabilizes as claimed, not an earnings break.
Headcount

A 12% workforce cut defended margins as revenue fell

Revenue per employee
Headcount fell from ~35,800 to ~31,500 in FY2026; revenue per employee still rose to $356K.
  • The fast-moving lever. Headcount dropped about 12% in FY2026, from ~35,800 to ~31,500, with $61M of severance — the swing lever behind the earnings hold.
  • Productivity kept climbing. Revenue per employee rose from $285K in FY2022 to $356K in FY2026, so the cut was not purely defensive shrinkage.
Ownership & pay

Professionally managed, not founder-run — alignment is engineered

1.08%
Insider ownership (22 people)
$44M
CEO beneficial stake
43.5x
CEO holdings vs base salary
$2.0M
CEO buy at $84.66 (Oct 2025)
  • Thin skin in the game. All 22 directors and officers own about 1.08% of the stock and the register is dominated by index funds — alignment of wealth, not owner-operator control.
  • One well-timed buy. In October 2025, near $85 and ~55% off the peak, the CEO bought $2.0M of stock with his own cash, reading the de-rating as a trough rather than a value trap to exit.
Federal demand

The civil business is mid-reset — the swing factor for the thesis

How management characterized Civil, quarter by quarter
QuarterCivil characterization
Q2 FY2026“Toughest conditions in a generation”; guided to a low-20s% decline
Q3 FY2026“Reset, and demand is accelerating”; pipeline up double digits
Q4 FY2026Book-to-bill 1.2x led by Health, but recompetes shorter and smaller; still down in FY2027
Civil revenue turning sequentially positive in H2 FY2027 is what most decides the durability case.
  • The tailwind sits with defense. National-security demand is backed by a rising federal budget request, and that core grew ~2% even as the overall business shrank.
  • Civil is the variable. Management calls Civil “reset,” but many recompetes return shorter and smaller and it still declines in FY2027, especially the first half.
What the price implies

The de-rating is real — cycle or impairment is what it turns on

Trailing P/E: how far the multiple travelled
Consensus mean price target is about $79 against the $65.87 quote.
  • Priced for stagnation. At about 10.5x forward earnings and a roughly −2% implied perpetual growth rate, the quote already discounts a mild secular impairment; even a no-growth base leaves modest upside.
  • Where the read tilts. The sell-side mean target is ~$79 versus $65.87; the honest offset is that this is a cohort discount on flattered figures, so the fairer anchor is nearer 11x clean earnings.
What to watch

Cash-generative and cheap if the civil trough is cyclical; a value trap if the impairment is permanent.

Read the full report →

This distills a guided study of Booz Allen built chapter by chapter — financials, the moat, federal demand, cash quality, ownership, and what the price implies.

Compiled from the full report · 2026-07-24 · For information, not investment advice.