MAXIMUS (MMS) Q4 Earnings Growth Expected: Time You Buy?

in INVESTING IDEAS by

MAXIMUS, Inc. is a mid-cap stock with a market capitalization of $4.947 billion and a total enterprise value of $4.881 billion. The company operates in the Information Technology sector and IT Services industry.

MAXIMUS, Inc. (NYSE:MMS) is scheduled to report Q4 earnings results on November 19, 2019. The company is expected to report earnings of $0.94/share on revenue of $758.2 million. The consensus earnings per share (EPS) of $0.94/share is based on a poll of 7 analysts and represents a growth of 30.6% over the same quarter last year when the company reported earnings of $0.72/share.

The revenue forecast of $758.2 million based on a poll of 7 analysts implies a year-over-year (YoY) growth of 35.8%. Last year the company reported $558.4 million in revenue for the quarter.

Expected to report EPS growth of $0.22/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $758.20 $558.45 35.8%
EPS $0.94 $0.72 30.6%

Highlights From Investor Presentation

MAXIMUS operates in three segments U.S. Heath & Human Services, U.S. Federal Services, and Outside the U.S.:

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The company also outlined the following historical and long-term growth drivers:

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Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.93 $0.97 4.3% Beat
Q2, 2019 $0.90 $0.96 6.7% Beat
Q1, 2019 $0.80 $0.86 7.5% Beat
Q4, 2018 $0.71 $0.72 0.6% Beat
Q3, 2018 $0.81 $0.91 12.3% Beat
Q2, 2018 $0.85 $0.87 2.6% Beat
Q1, 2018 $0.75 $0.78 4.0% Beat
Q4, 2017 $0.77 $0.81 4.8% Beat

What are your expectations from MAXIMUS for earnings this quarter? Let us know in the comments!

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 7.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-08 $70.41 $75.79 7.6% Increase
2019-05-09 $72.35 $72.86 0.7% Increase
2019-02-07 $71.84 $69.89 -2.7% Decline
2018-11-20 $63.95 $66.54 4.1% Increase

Fundamentals And Technical Analysis

MAXIMUS is currently trading at $77.53/share, down -0.2% for the day. The company is trading at approximately 94.5% of its 52-week high of $82.02/share. The company’s stock price is up 10.1% since the last earnings report and up 1.1% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 55.54 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 21.7x and a forward P/E multiple of 20.3x. MAXIMUS’s current share price also implies a price-to-book (P/B) multiple of 4.0x. The following table summarizes some other key fundamental ratios:

Data as of November 18, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 30, 2019
Stock Price (Current) $77.53
P/E Ratio 21.7x
P/E Ratio (Fwd) 20.3x
PEG Ratio 2.3
Total Debt to Capital (%) 0.1%
Levered Free Cash Flow $354.9 million
Enterprise Value / EBITDA 13.2x

Company Profile: MAXIMUS, Inc.

MAXIMUS, Inc. provides business process services (BPS) to government health and human services programs worldwide.

The company’s Health Services segment offers various BPS, appeals, and assessments for state, provincial, and national government programs, including Medicaid, Children’s Health Insurance Program, Affordable Care Act, Health Insurance British Columbia, Health Assessment Advisory Service contract, and Preadmission Screening and Resident Reviews. This segment offers program eligibility support and enrollment; application assistance and independent health plan enrollment counseling; beneficiary outreach, education, eligibility, enrollment, and renewal; document and record management; payment processing and administration; and digital eHealth and wellbeing solutions. It also provides independent disability, long-term sick, and other health assessment; occupational health clinical assessment; specialized consulting; and centralized multilingual customer contact centers and multichannel self-service options for enrollment.

The company’s U.S. Federal Services segment offers centralized citizen engagement centers and support services; document and record management; case management, citizen engagement, and consumer education; independent medical reviews and worker’s compensation benefit appeals; and Medicare and Medicaid appeals, and program eligibility appeals. It 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 company’s Human Services segment offers national, state, provincial, and local human services agencies, as well as various BPS and related consulting services. It also provides management tools and professional consulting, program consulting, and tax credit and employer services. The company was founded in 1975 and is headquartered in Reston, Virginia.

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