Guidance of 3 to 6 percent local-currency growth and 16 percent margins can support $16 of fiscal 2028 earnings. At 15.5 times that is a $251 stock, 17 percent above $215.
Key points
- $74.2 billion fiscal 2026 revenue and $13.56 GAAP EPS, with $11.6 billion free cash.
- 3%, 6% local-currency growth guided for FY27, plus 10, 30 bps of margin each year through FY29.
- $5.5 billion of FY27 buybacks and a 5% dividend lift sit on a 1.2, 1.3 free-cash-to-earnings conversion.
The call
The $215 share needs about $14.60 of FY27 earnings at 14.7 times, which is the midpoint of company guidance. That multiple is cheap versus the last decade only if growth stays mid-single digit and AI does not shrink the work.
I model $77.5 billion of FY27 revenue, 16.0% operating margin, and $14.60 of EPS, then $16.20 in FY28 after buybacks. Fifteen and a half times that FY28 number is $251. The market is too pessimistic on duration of large-program demand.
Revenue by fiscal year ($ billions)Company reports through FY26; my FY27-FY28E. As of Oct 14, 2026.
Valuation
| Item | Figure |
|---|
| FY27 revenue (my estimate) | $77.5 billion |
| FY27 operating margin | 16.0% |
| FY27 GAAP EPS (guidance mid) | $14.60 |
| FY28 EPS (my estimate) | $16.20 |
| Multiple on FY28 EPS | 15.5 times |
| 12-month target | $251 |
Fifteen and a half times is a mid-cycle services multiple for a firm that still converts more than a dollar of cash per dollar of earnings. Upside is about 17% if the FY28 path holds; the loss if growth stalls at 2% is a return toward 13 times and a $190 share.
GAAP diluted EPS and my pathSEC and Oct 1 2026 release; my FY27-FY28E. Oct 14, 2026.
Risks
- Discretionary consulting stays weak and FY27 local-currency growth prints at the 3% floor.
- Pricing keeps falling in renewals and operating margin misses the 15.9%, 16.1% band.
- A large federal or cyber contract loss after the FBI-related headlines.
What would change my mind
Two quarters of local-currency growth below 3% with book-to-bill under 1.0 would cut the multiple and the target.