Will Positive Earnings Change the Trajectory of Booz Allen Hamilton Stock? Shares of Booz Allen Hamilton (NYSE:BAH) stock are struggling to find direction in advance of the company's earnings report on May 21, 2021. Investors in the data analytics company have had a volatile ride so far in 2021.

Shares of Booz Allen Hamilton (NYSE:BAH) stock are struggling to find direction in advance of the company's earnings report on May 21, 2021. Investors in the data analytics company have had a volatile ride so far in 2021.

One reason for the drop in the stock may very well be the emergence of Palantir (NYSE:PLTR) which came on the scene via a direct listing in late 2020. However, after the PLTR stock price nearly tripled from its direct listing price in early 2021, the stock has turned negative for 2021.

One obstacle that seems to be in the way for both companies is their reliance on contracts from the federal government. In fact, while Palantir is making an effort to broaden its offerings to the private sector, Booz Allen Hamilton remains highly reliant on government contracts.

BAH stock looks oversold to me. But, we write these articles so you can decide for yourself. So let's get to it.

Earnings Are Looking Strong

Analysts are projecting Booz Allen Hamilton to deliver positive earnings per share of 82 cents on revenue of $2 billion. Both of those numbers would be an increase from the same quarter in 2020.

The whisper number suggests that BAH may exceed the EPS estimate by 10 cents. However, the company reported similarly strong year-over-year numbers in the prior quarter and the stock price fell after earnings. Is more of the same in order?

Cybersecurity May Provide a Boost

The Colonial pipeline hack is the latest reminder of why cybersecurity remains one of our nation's greatest threats. This is one of Booz Allen Hamilton's core competencies. The company has made several acquisitions in the past five years to bolster their cybersecurity capabilities. The most recent is the company's strategic investment in Tracepoint, a cybersecurity company.

And sure enough, BAH stock climbed nearly 15% in January to reach its 52-week high.

Will the Liberty Acquisition Provide a Boost?

In early May, Booz Allen Hamilton entered into a definitive agreement to acquire Liberty IT Solutions, LLC for $725 million. Liberty is a leader in information technology and services and will, among other things, expand BAH's digital solutions capabilities. The deal is expected to close in the company's first fiscal quarter of 2022, ending in June.

In terms of fundamental analysis, Booz Allen Hamilton would stand to benefit from this acquisition. It is expected to be immediately accretive to both earnings and revenue. If investors were going to be negative about anything it's that earnings growth has slowed in the last two years and revenue growth is behind the sector.

And initially, the announcement provided a boost in the stock. However, that optimism soon turned sour. Since closing at $85.61 on May 4 (the day the announcement was made), BAH stock is down almost 5%.

Is BAH Stock a Buy?

While Palantir has been getting a lot of attention and not without reason, Booz Allen Hamilton offers a viable alternative. For starters, the company has a market cap that is only about one-third of Palantir's. Some of this can be attributed to the fact that Booz Allen Hamilton derives its revenue almost exclusively from government contracts.

Nevertheless, it shouldn't be dismissed that Booz Allen Hamilton is a profitable company and has a history of paying a dividend to shareholders. Both factors give investors reasons to be interested. But should they buy BAH stock?

The stock price has been consolidating in recent sessions which means the stock should be ready to make a move. But which way will it go? BAH stock shows a line of support around $80 which suggests the downside risk to buying now is minimal. However with overall market sentiment being negative, you may want to see what the company says during its earnings report.

The stock gets an overall rating of Buy. However, analysts don't give Booz Allen Hamilton a tremendous upside from its current price.

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