Booz Allen’s (BAH) revenue and operating income are like staring at paint dry. It is range-bound, never too hot, never too cold, and makes the company look almost sedated as it floats through the bureaucracy of America searching for one government contract after another. Since 2011, Booz Allen has averaged $1.4 billion in revenue with a high of $1.58 billion (Q4 2017) or 12% off the average, and a low of $1.39 billion or 1% off the average. Since hitting a trough in the 2014/2015 fiscal years, when defense spending was on the decline, revenues have started to pick up leading into Q3 2018. Same for operating income - range-bound, steady, predictable, coming in every quarter at an average of 7.75% of revenue.
**Derived from Booz Allen Hamilton's 10Qs since 2011.
But this image, much like the rest of Booz Allen, is a delusion. The stable revenue and operating income belie the seasonal cyclicality of government contracting. Just as a retailer goes on neutral every year between the months of February to September, waiting for the Christmas season to put it back in the black, so too does Booz Allen wait until every September when something magical happens. Not magical in the sense that something useful is being done for the good of humanity or national security, mind you, but magical nonetheless.
