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Maximus (MMS)
NYSE:MMS
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Maximus
(NYSE:MMS)
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Rating:64Neutral
Price Target:
$84.00
▼(-2.57% Downside)
Action:DowngradedDate:02/06/26
The score is supported by improved profitability and a stronger balance sheet, plus a reasonable valuation and a guidance raise on the earnings call. These positives are tempered by deteriorating cash flow and weakening revenue trends, and especially by bearish technical signals with the stock trading well below major moving averages.
Positive Factors
Improved Profitability
Sustained margin expansion and raised full-year margin guidance reflect durable operational improvements and productivity gains. Higher margins provide long-term cushion versus revenue variability, enabling reinvestment in tech and bidding flexibility across multi-year government contracts.
Strong Balance Sheet / Low Leverage
Very low net leverage and sizable equity give the company financial flexibility to fund bids, invest in automation, or absorb award timing shifts. Strong ROE signals capital productivity, reducing refinancing risk and supporting longer-term strategic optionality like targeted M&A or tech investment.
Large Pipeline & AI/Product Wins
A large, growing opportunity funnel combined with demonstrable AI automation wins supports durable future revenue. Productized AI tools can raise program profitability and competitiveness on bids, helping convert tracked opportunities into higher-margin, repeatable government work over multiple years.
Negative Factors
Revenue Weakness
Sustained revenue softness limits the quality of earnings even with better margins; slower top-line traction can compress long-term growth expectations for government services where scale matters and new awards often drive multi-year revenue ramps.
Deteriorating Cash Flow & Elevated DSO
Worsening cash conversion and rising receivables create structural working-capital pressure in a contract business. Persistent FCF weakness reduces internal funding for technology and hiring, may increase reliance on short-term borrowings, and raises execution risk during award timing volatility.
Weak Award Environment / Timing Risk
Low book-to-bill and awards subject to protest create structural uncertainty around near- and medium-term revenue visibility. Delayed or lost awards can push expected contributions into later years, undermining growth plans and making multi-year forecasting and capacity planning harder.
Maximus (MMS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.11B
Dividend Yield1.38%
Average Volume (3M)696.73K
Price to Earnings (P/E)11.5
Beta (1Y)0.37
Revenue Growth2.36%
EPS Growth11.30%
CountryUS
Employees41,100
SectorIndustrials
Sector Strength72
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)1.85
Shares Outstanding54,548,576
10 Day Avg. Volume963,324
30 Day Avg. Volume696,727
Financial Highlights & Ratios
PEG Ratio1.56
Price to Book (P/B)3.13
Price to Sales (P/S)0.97
P/FCF Ratio14.33
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue1.05
Enterprise Value/Gross Profit4.46
Enterprise Value/Ebitda7.77
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)8.17
Revenue Forecast (FY)$5.47B
Maximus Business Overview & Revenue Model
Company DescriptionMaximus, Inc. provides business process services (BPS) to government health and human services programs. It operates through three segments: U.S. Services, U.S. Federal Services, and Outside the U.S. The U.S. Services segment offers various BPS solutions, such as program administration, appeals and assessments, and related consulting works for U.S. state and local government programs, including the Affordable Care Act, Medicaid, the Children's Health Insurance Program, Temporary Assistance to Needy Families, child support programs, Preadmission Screening and Resident Reviews, and Independent Developmental Disability assessments. This segment also provides program eligibility support and enrollment; centralized multilingual customer contact centers, multichannel, and digital self-service options for enrollment; application assistance and independent health plan choice counseling; beneficiary outreach, education, eligibility, enrollment, and redeterminations; person-centered independent disability, long-term sick, and other health assessments; and specialized consulting services. The U.S. Federal Services segment offers centralized citizen engagement centers and support services; document and record management; case management, citizen support, and consumer education; independent medical reviews and worker's compensation benefit appeals; Medicare and Medicaid appeals; and federal marketplace eligibility appeals. This segment also provides modernization of systems and information technology infrastructure; infrastructure operations and support services; software development, operations, and management services; and data analytics services. The Outside the U.S. segment offers BPS solutions for governments and commercial clients outside the United States, including health and disability assessments, program administration for employment services, and other job seeker-related services. The company was incorporated in 1975 and is headquartered in Tysons, Virginia.
How the Company Makes MoneyMaximus generates revenue through a diverse range of business models, primarily based on contracts with government agencies. The company earns money by providing program management services, which often include the administration of health care benefits and social services. A significant portion of revenue comes from performance-based contracts, where earnings are linked to specific outcomes or efficiencies achieved. Additionally, Maximus generates income from technology solutions, including software and data analytics services that enhance the operational capabilities of government clients. Strategic partnerships with other technology firms and consultancy groups help expand their service offerings and enhance their competitive edge, contributing further to their revenue streams.
Maximus Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The call presents a cautiously positive outlook: management reported solid Q1 adjusted profitability metrics, raised full-year earnings and margin guidance, highlighted meaningful pipeline growth, and showcased AI/product momentum and strategic wins (GSA BPA, AI dispute automation, Accuracy Assistant, Forbes recognition). Counterbalancing these positives are near-term revenue declines (Q1 revenue down 4.1%), softness in US Services and Outside-the-US segments, low book-to-bill in the quarter (0.2x), and seasonal / timing-driven cash outflows and elevated DSO. Management attributes many negatives to timing (government shutdown effects, expected award timing shifts) and positioned FY26 as a year of durable margins while expecting new work to contribute more meaningfully in FY27–FY28. Overall, the positives (guidance raise, margin expansion, pipeline growth, AI wins) outweigh the near-term operational and cash timing challenges.Q1-2026 Updates
Positive Updates
Raised Full-Year Earnings Guidance and Improved Margin Outlook
Adjusted EPS guidance increased by $0.10 to a range of $8.05–$8.35 (midpoint $8.20), implying >11% year-over-year earnings growth at the midpoint. Full-year adjusted EBITDA margin guidance improved by ~30 basis points to approximately 14%.
Q1 Profitability Improvement (Adjusted)
Q1 adjusted EBITDA margin rose to 12.7% from 11.2% a year ago. Adjusted EPS for the quarter was $1.85 versus $1.61 in the prior year, reflecting margin and earnings improvement despite revenue decline.
US Federal Services: Organic Growth and Margin Expansion
US Federal Services revenue of $787M increased 0.8% year-over-year (organic growth). Segment operating margin expanded to 16.5% from 12.7% in the prior year, driven by technology initiatives improving staff productivity; full-year segment margin guidance raised to 16.5%–17% (up 100 basis points).
Pipeline and Proposal Activity Increased
Total pipeline grew to $59.1B (from $51.3B at 9/30). Proposals pending ($3.8B) plus proposals in preparation ($2.4B) combined to $6.2B, a 55% increase from $4.0B a year ago — indicating growing near-term opportunity funnel.
Strategic Wins and AI/Automation Proof Points
Won a major GSA BPA (single awardee) to support GXCC transformation (subject to protest) and an outside-the-US technology bid where Maximus scored ~98% of technical points. AI-driven dispute processing resolved 45% of disputes autonomously, materially increasing throughput and improving financial performance on that program.
Product Launches Targeting SNAP/MEDICAID Opportunities
Launched 'Accuracy Assistant,' an AI-powered tool to help states reduce SNAP payment error rates by detecting data inconsistencies and flagging potential errors in real time; CMS named Maximus one of 10 companies pledging support for Medicaid community engagement implementation.
Strategic Portfolio Actions and Recognition
Completed divestiture of a $25M-annual-revenue child support business recognizing a ~$9M gain to free capacity for higher-value state/federal work. Company named to Forbes' America's Best Employers 2026 list for the second consecutive year.
Maintained Free Cash Flow Guidance and Leverage Discipline
Despite Q1 cash outflow, full-year free cash flow guidance remains $450M–$500M. Total debt ended at $1.58B with consolidated net leverage of 1.8x (below stated 2–3x target); management expects to finish FY26 at or below 1.0x absent M&A or repurchases.
Negative Updates
Revenue Decline in Q1
Total Q1 revenue was $1.35B, down 4.1% year-over-year. Revenue headwinds were primarily organic after accounting for a ~1.5% impact from a prior period outside-the-US divestiture.
US Services Segment Contraction and Margin Pressure
US Services revenue decreased to $415M from $452M (a decline of ~8.2% year-over-year). Segment operating margin fell to 7.1% from 9.0%, with Q1 margin historically depressed due to seasonality and higher resource needs during open enrollment periods.
Outside-the-US Revenue Decline and Operating Loss
Outside-the-US revenue dropped to $143M from $170M (down ~15.9% year-over-year), driven partly by prior divestitures; the segment recorded an operating loss of $1.4M versus an $8.1M operating profit in the prior year period.
Weak Award Environment / Low Book-to-Bill
Signed awards for FY2026 totaled $246M with $699M awarded but unsigned; trailing twelve-month book-to-bill was ~0.5x and quarterly book-to-bill only 0.2x due to very light award activity in Q1 — management attributes this to timing impacts from government shutdown and expects award timing to normalize later in the year.
Q1 Cash Flow Outflows and Elevated DSO
Cash used in operations was a net outflow of $244M and free cash flow was a net outflow of $251M in Q1. Days sales outstanding rose to 78 days due to administrative delays in collections (including shutdown-related aftereffects); temporary borrowing increased leverage from 1.5x to 1.8x.
Limited Near-Term Contribution from New Work
Management's FY2026 guidance assumes virtually no contribution from new work; delays in award activity prompted a $50M reduction at the top end of revenue guidance, signaling that new contract revenue is expected to materialize more in FY27 and FY28.
Contract and Award Uncertainty
Some major awards remain subject to timing and protest risk (e.g., the GSA BPA is subject to the regulatory protest period). Additionally, award timing slowed after the government shutdown, creating short-term uncertainty for federal award cadence.
Company Guidance
Maximus raised FY‑2026 earnings guidance while narrowing revenue guidance to $5.20B–$5.35B, now targeting adjusted EBITDA of ~14% (up 30 bps) and adjusted EPS $8.05–$8.35 (midpoint $8.20, >11% YoY); free cash flow guidance is unchanged at $450M–$500M, interest expense is expected to be roughly $75M and the tax rate 24.5%–25.5%. Q1 results that informed the update included revenue $1.35B (‑4.1% YoY), adjusted EBITDA margin 12.7% and adjusted EPS $1.85, with cash used in operations of $244M and free cash flow outflow of $251M driving DSO to 78 days; total debt was $1.58B and consolidated net leverage 1.8x (down from 1.5x at 9/30 but still below the 2–3x target and expected to finish FY‑26 at or below 1.0x absent M&A or buybacks). Segment and pipeline metrics cited: Q1 US Federal revenue $787M (+0.8%) with a 16.5% segment margin (FY guide 16.5%–17%), US Services revenue $415M with a Q1 margin of 7.1% (FY guide 10.5%–11%), Outside US revenue $143M with an estimated FY margin of 13%; signed awards totaled $246M with $699M awarded but not signed, a TTM book‑to‑bill of ~0.5x (Q1 quarterly 0.2x), and a pipeline of $59.1B (including $3.8B proposals pending, $2.4B in preparation, $52.9B tracked, 59% new work; $6.2B proposals pending+prep, +55% YoY).Maximus Financial Statement Overview
Summary
Profitability and returns improved (TTM margins stronger; ROE ~21.8%) and leverage is much lower in TTM (debt-to-equity ~0.04). Offsetting this, revenue momentum has weakened (TTM revenue ~-1.1%) and cash flow quality deteriorated with sharply lower TTM free cash flow (~-40%) and weak operating cash flow vs. net income (~0.44).Income Statement
Profitability has improved meaningfully versus prior years, with TTM (Trailing-Twelve-Months) margins showing solid execution (gross margin ~23.8%, EBITDA margin ~12.9%, net margin ~6.9%) and EBIT/EBITDA dollars trending higher than earlier periods. However, growth has softened: annual revenue growth was modest in FY2025 (~2.4%) and TTM (Trailing-Twelve-Months) revenue is down (~-1.1%), which limits the quality of the earnings momentum despite better margins.74
Positive
Balance Sheet
Leverage has improved sharply in the latest period, with very low debt relative to equity in TTM (Trailing-Twelve-Months) (debt-to-equity ~0.04) versus materially higher leverage in prior annual periods (~0.69–1.15). Equity remains sizable (~$1.72B) and returns are strong (TTM (Trailing-Twelve-Months) return on equity ~21.8%), supporting balance-sheet strength. The key watch item is the large year-to-year swing in total debt versus the annual figures, which suggests capital structure changed significantly and bears monitoring for sustainability.82
Very Positive
Cash Flow
Cash generation is positive, with TTM (Trailing-Twelve-Months) free cash flow of ~$218M and free cash flow running at ~82% of net income, indicating earnings are reasonably backed by cash. That said, TTM (Trailing-Twelve-Months) operating cash flow relative to net income is weak (~0.44), and free cash flow has declined sharply in the latest period (TTM (Trailing-Twelve-Months) free cash flow growth ~-40%), pointing to higher cash needs or working-capital pressure versus the prior year.60
Neutral
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.37B | 5.43B | 5.31B | 4.90B | 4.63B | 4.25B |
| Gross Profit | 1.26B | 1.25B | 1.16B | 934.02M | 849.35M | 902.62M |
| EBITDA | 723.27M | 674.75M | 624.28M | 456.45M | 464.76M | 502.74M |
| Net Income | 371.78M | 319.03M | 306.91M | 161.79M | 203.83M | 291.20M |
Balance Sheet | ||||||
| Total Assets | 4.21B | 4.07B | 4.13B | 3.99B | 3.99B | 4.12B |
| Cash, Cash Equivalents and Short-Term Investments | 137.59M | 260.46M | 235.76M | 122.09M | 136.79M | 156.57M |
| Total Debt | 1.74B | 1.44B | 1.28B | 1.43B | 1.51B | 1.71B |
| Total Liabilities | 2.49B | 2.40B | 2.29B | 2.32B | 2.44B | 2.64B |
| Stockholders Equity | 1.72B | 1.67B | 1.84B | 1.67B | 1.55B | 1.48B |
Cash Flow | ||||||
| Free Cash Flow | 218.48M | 366.16M | 401.07M | 223.65M | 233.69M | 480.76M |
| Operating Cash Flow | 264.97M | 429.37M | 515.26M | 314.34M | 289.84M | 517.32M |
| Investing Cash Flow | -31.37M | -60.26M | -129.10M | -80.96M | -54.01M | -1.84B |
| Financing Cash Flow | -178.72M | -343.88M | -275.65M | -250.80M | -248.27M | 1.39B |
Maximus Technical Analysis
Negative
86.22
Price Trends
87.57
Negative
86.17
Negative
81.33
Negative
Market Momentum
-4.96
Positive
32.69
Neutral
22.48
Neutral
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 86.22 is above the 20-day moving average (MA) of 84.01, below the 50-day MA of 87.57, and above the 200-day MA of 81.33, indicating a bearish trend. The MACD of -4.96 indicates Positive momentum. The RSI at 32.69 is Neutral, neither overbought nor oversold. The STOCH value of 22.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MMS.
Maximus Risk Analysis
Maximus disclosed 37 risk factors in its most recent earnings report. Maximus reported the most risks in the "Legal & Regulatory" 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $4.19B | 31.92 | 6.50% | 0.71% | 0.20% | 2.72% | |
73 Outperform | $2.64B | 17.40 | 9.10% | 2.20% | 4.62% | 102.72% | |
68 Neutral | $10.56B | 33.77 | 10.08% | 1.14% | 6.35% | 24.07% | |
66 Neutral | $1.62B | 19.67 | 7.44% | ― | 59.19% | -35.47% | |
64 Neutral | $4.11B | 11.45 | 22.09% | 1.38% | 2.36% | 11.30% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
51 Neutral | $1.70B | -11.45 | -12.48% | ― | 93.41% | -2515.85% |
* Industrials Sector Average
MMS
Maximus
73.78
8.68
13.33%
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FA
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Maximus Corporate Events
Executive/Board Changes
Maximus Announces Upcoming Chief Legal Officer Transition
Neutral
Dec 18, 2025
On December 15, 2025, Maximus, Inc. announced that its Chief Legal Officer and Corporate Secretary, John T. Martinez, has notified the company of his intention to resign effective February 15, 2026, to pursue a new opportunity more closely aligned with his industry background and experience. The company stated that the decision was not the result of any disagreement over operations, policies, or practices, and Martinez will remain in his current role until his departure while Maximus conducts a search for his replacement, signaling an orderly legal and governance leadership transition.
The most recent analyst rating on (MMS) stock is a Buy with a $93.00 price target. To see the full list of analyst forecasts on Maximus stock, see the MMS Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.