Maximus (MMS) AI Stock Analysis

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Maximus

(NYSE:MMS)

69Neutral

Maximus demonstrates strong financial performance with consistent revenue growth and improved leverage. The earnings call highlighted successful contract wins and improved profitability from divestitures, though challenges in cash flow and the US Services segment are noted. Technical indicators suggest caution due to downward momentum, while valuation is fair with moderate income potential. The overall outlook is stable, supported by robust financials and strategic initiatives.

Maximus (MMS) vs. S&P 500 (SPY)

Market Cap

$3.84B

Dividend Yield1.77%

Average Volume (3M)684.67K

Price to Earnings (P/E)14.6

Beta (1Y)0.54

Revenue Growth8.01%

EPS Growth53.64%

CountryUS

Employees41,100

SectorIndustrials

Sector Strength61

IndustrySpecialty Business Services

Share Statistics

EPS (TTM)4.64

Shares Outstanding56,600,400

10 Day Avg. Volume614,109

30 Day Avg. Volume684,672

Financial Highlights & Ratios

PEG Ratio0.27

Price to Book (P/B)N/A

Price to Sales (P/S)0.71

Price to Cash Flow (P/CF)-11.90

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$90.00

Price Target Upside33.39% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Maximus Business Overview & Revenue Model

Company DescriptionMaximus, Inc. (MMS) is a leading provider of government services worldwide, primarily focused on health and human services programs. The company partners with government agencies to deliver administrative services, including business process management, consulting, and technology solutions. Maximus operates in sectors such as health, human services, and workforce services, aiming to improve the efficiency and effectiveness of government programs.

How the Company Makes MoneyMaximus generates revenue by offering a range of services to government clients. Its primary revenue streams include contracts for program administration, technology solutions, and consulting services. The company often secures long-term contracts with federal, state, and local government agencies, providing services like health benefit enrollment, child support services, and employment programs. Maximus's earnings are significantly influenced by its ability to win and maintain these contracts, often through competitive bidding processes. Additionally, the company may form partnerships or collaborations with other entities to enhance its service delivery and expand its market reach.

Maximus Financial Statement Overview

Summary

Maximus presents a solid financial profile with consistent revenue growth and improved leverage metrics. The company demonstrates strong operational efficiency and effective cash flow management. While net profitability margins show some pressure, the overall financial health remains robust, supported by strong returns on equity and stable cash flows.

Income Statement

Positive

Maximus has shown a strong revenue growth with a TTM increase from $4.90 billion to $5.38 billion, translating to an approximate 9.75% growth rate. The gross profit margin remains healthy at 22.89% for the TTM, and the EBIT margin is at 8.70%. However, the net profit margin slightly decreased to 5.28% compared to the previous year, indicating some pressure on net profitability.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved significantly from previous years, now standing at a low 0.05, indicating reduced leverage. The return on equity is at 17.24%, reflecting strong returns for shareholders. However, the equity ratio is at 40.57%, suggesting moderate financial stability.

Cash Flow

Positive

Operating cash flow remains robust at $413.65 million TTM, with a high operating cash flow to net income ratio of 1.46, indicating strong cash generation relative to earnings. Free cash flow growth is solid at 25.52% compared to the previous year. However, the free cash flow to net income ratio is slightly lower at 0.99, showing most of the earnings are converted into free cash.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
5.38B	5.31B	4.90B	4.63B	4.25B	3.46B
	Gross Profit
1.23B	1.25B	1.03B	939.81M	946.98M	711.00M
	EBIT
468.00M	488.50M	294.79M	325.90M	408.53M	288.28M
	EBITDA
529.28M	488.50M	456.45M	464.76M	502.74M	396.08M
	Net Income Common Stockholders
283.96M	306.91M	161.79M	203.83M	291.20M	214.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
72.65M	183.12M	65.41M	40.66M	135.06M	71.74M
	Total Assets
4.06B	4.13B	3.99B	3.99B	4.12B	2.02B
	Total Debt
89.74M	97.22M	1.43B	1.51B	1.71B	213.65M
	Net Debt
17.09M	-85.90M	1.36B	1.47B	1.57B	141.92M
	Total Liabilities
2.41B	2.29B	2.32B	2.44B	2.64B	782.88M
	Stockholders Equity
1.65B	1.84B	1.67B	1.55B	1.48B	1.24B
Cash Flow		Free Cash Flow
280.71M	401.07M	223.65M	233.69M	480.76M	203.88M
	Operating Cash Flow
413.65M	515.26M	314.34M	289.84M	517.32M	244.59M
	Investing Cash Flow
-130.93M	-129.10M	-80.96M	-54.01M	-1.84B	-44.14M
	Financing Cash Flow
-312.29M	-275.65M	-250.80M	-248.27M	1.39B	-230.09M

Maximus Technical Analysis

Technical Analysis Sentiment

Negative

Last Price67.47

Price Trends

50DMA

68.49

Negative

100DMA

71.63

Negative

200DMA

80.04

Negative

Market Momentum

MACD

-0.31

Negative

RSI

52.64

Neutral

STOCH

85.04

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MMS, the sentiment is Negative. The current price of 67.47 is below the 20-day moving average (MA) of 67.91, below the 50-day MA of 68.49, and below the 200-day MA of 80.04, indicating a bearish trend. The MACD of -0.31 indicates Negative momentum. The RSI at 52.64 is Neutral, neither overbought nor oversold. The STOCH value of 85.04 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MMS.

Maximus Risk Analysis

Maximus disclosed 34 risk factors in its most recent earnings report. Maximus reported the most risks in the “Ability to Sell” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Maximus Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	72 Outperform	$3.09B	21.52	7.17%	0.79%	5.04%	31.69%
CBZ	69 Neutral	$4.11B	69.41	3.19%	―	13.97%	-54.48%
MMS	69 Neutral	$3.84B	14.62	16.88%	1.77%	8.01%	53.64%
ABM	66 Neutral	$2.82B	35.73	4.46%	2.08%	2.81%	-67.57%
Sector *	62 Neutral	$7.68B	13.06	3.21%	3.34%	3.62%	-14.40%
FA	61 Neutral	$2.49B	549.40	-9.96%	―	12.63%	-364.02%
ARMK	60 Neutral	$9.01B	26.76	11.46%	1.32%	-5.98%	-46.55%

* Industrials Sector Average

Performance Comparison

MMS

Maximus

67.47

-11.63

-14.70%

ABM

ABM Industries

44.37

1.50

3.50%

CBZ

CBIZ

75.44

1.11

1.49%

UNF

UniFirst

169.99

9.12

5.67%

ARMK

ARAMARK Holdings

32.81

1.21

3.83%

First Advantage

13.83

-1.84

-11.74%

Maximus Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -10.62% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

Maximus delivered strong first-quarter results, with notable contract wins and successful divestitures improving profitability. However, challenges in the US Services segment and cash flow management slightly offset these gains.

Highlights

Strong First Quarter Results

Maximus reported revenue of $1.40 billion for Q1 FY2025, representing a 5.7% year-over-year growth, with 6.3% on an organic basis. Adjusted EPS was $1.61 for the quarter, up from $1.34 in the prior year period.

Successful Contract Recompetes

The company secured favorable outcomes on key contracts, including the CMS contact center operations and VA medical disability examination work. These contracts are expected to continue through 2031 and have been reawarded for two years, respectively.

Divestiture of Non-core Operations

Maximus completed the divestiture of its employment services businesses in Australia and South Korea, reducing volatility and improving profitability in its Outside the US segment.

Increase in Share Repurchase Program

The Board of Directors authorized an increase of $200 million to the share repurchase program. Approximately $290 million was deployed in share repurchases from the fiscal year start through last week.

New Contract Wins and Pipeline Strength

Maximus secured new contracts, including a $76 million contract with the Federal Reserve System and a $123 million contract with the National Energy Technology Laboratory, contributing to a strong pipeline.

Lowlights

US Services Segment Revenue Decline

Revenue in the US Services segment decreased by 7.7% to $452 million, with the operating income margin dropping to 9.0% from 13.5% in the prior year period due to the completion of the Medicaid unwinding exercise.

Cash Flow Challenges

Cash used in operating activities was $80 million, and free cash flow was an outflow of $103 million for the quarter ended December 31, 2024, reflecting expected seasonality and timing of payments.

Higher Effective Tax Rate

The effective tax rate was higher in the quarter due to divestiture charges, leading to an adjusted EPS impact.

Company Guidance

During the Maximus Fiscal 2025 First Quarter Conference Call, strong financial results were reported, with a 5.7% year-over-year revenue increase to $1.40 billion and an adjusted EBITDA margin of 11.2%. The US Federal Services segment led growth, with a 15.3% revenue increase, while the outside the U.S. segment posted a 6.0% increase. Notably, the company completed the divestiture of its employment services businesses in Australia and South Korea, reducing volatility and improving profitability. Additionally, a $200 million increase in the share repurchase program was announced, with $290 million already deployed. The total pipeline of opportunities stood at $41.4 billion, with 57% representing new work. Updated guidance for fiscal 2025 reflected increased earnings and free cash flow projections, with adjusted EPS raised to $5.90 to $6.20 per share. The company emphasized its strong position in government services, highlighting successful contract recompetes and new wins, including a $76 million contract with the Federal Reserve System and a $123 million contract with the National Energy Technology Laboratory.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.