A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
We believe that MAXIMUS, Inc. MMS, with Growth Score of A and a market cap of $3.8 billion, is a stock that investors should retain in their portfolio.
Factors that Bode Well
MAXIMUS has transformed into a leading operator of government health and human services programs globally. The company’s business process management expertise as well as ability to deliver cost effective and high-scale solutions positions it as a lucrative partner to governments. MAXIMUS maintains solid relationships and strong reputation with governments. Long-term contracts provide the company predictable recurring revenue streams. Also, the company is focused on expanding foothold in clinical services as well as long-term services and supports.
Maximus, Inc. Revenue (TTM)
Maximus, Inc. revenue-ttm | Maximus, Inc. Quote
MAXIMUS has a portfolio target operating profit margin range of 10% to 15% with high cash conversion and access to a $400-million credit facility. This financial flexibility enables it to pursue business investment and strategic acquisition opportunities. The 2019 acquisition of GT Hiring Solutions improved the reach and capabilities of the company’s Canadian employment services.
MAXIMUS’ global presence makes it vulnerable to the risks associated with foreign currency exchange rate fluctuations. Notably, the company's top line was unfavorably impacted by foreign currency translation of $1.8 million in the first quarter of fiscal 2020.
Poor performance of the Outside in the U.S. segment is denting MAXIMUS’ top line and margins. Revenues in the segment declined 9% in first-quarter fiscal 2020. Gross profit margin declined 440 basis points.
Zacks Rank and Stocks to Consider
MAXIMUS carries a Zacks Rank #3 (Hold).
Some other better-ranked stocks in the broader Zacks Business Services sector are Charles River Associates CRAI, Genpact Limited G and Blucora, Inc. BCOR. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term expected EPS (three to five years) growth rate for Charles River, Genpact and Blucora is 13%, 14% and 20%, respectively.
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Charles River Associates (CRAI) : Free Stock Analysis Report
Genpact Limited (G) : Free Stock Analysis Report
Maximus, Inc. (MMS) : Free Stock Analysis Report
Blucora, Inc. (BCOR) : Free Stock Analysis Report
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