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MAXIMUS, Inc.‘s MMS shares have charted a solid trajectory recently, appreciating 17.7% in the past year compared with a 5.7% rise of the industry it belongs to.
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The company’s earnings and revenues for fiscal 2021 are expected to increase 39.2% and 22.3% respectively, year over year.
What’s Supporting the Rally?
Commitment toward shareholder returns makes MAXIMUS a reliable way for investors to compound wealth over the long term. During fiscal 2020 and 2019, the company paid out cash dividends of $70.2 million and $63.9 million, respectively. It paid out $11.7 million in dividends to its shareholders during each of the fiscal 2018, 2017 and 2016.
MAXIMUS has been active on the acquisition front to expand its business processes, knowledge and client relationships, enhance technical capabilities as well as gain additional skill sets. Strategic acquisitions also complement the company’s long-term organic growth strategy. The recent acquisition of Veterans Evaluation Services is expected to boost MAXIMUS’ independent clinical assessments business at the Federal level and expand its presence in the U.S. Department of Veterans Affairs.
MAXIMUS' total debt at the end of third-quarter fiscal 2021 was $1,694 million, higher than $268 million at the end of the prior quarter. The company's total debt to total capital ratio of 0.54, was significantly higher than the prior quarter's figure of 0.16. An increase in debt-to-capitalization ratio indicates higher risk of insolvency during uncertain times.
The company’s cash and cash equivalent of $96 million at the end of the reported quarter was below this debt level, underscoring that it doesn’t have enough cash to meet this debt burden. However, it can meet the short-term debt of $61 million.
Zacks Rank and Stocks to Consider
MAXIMUS currently carries a Zacks Rank #3 (Hold).
Some better-ranked Business Services stocks are ManpowerGroup Inc. MAN, Equifax EFX and TransUnion TRU. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, Equifax and TransUnion is pegged at 24.2%, 15.2% and 22%, respectively.
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ManpowerGroup Inc. (MAN) : Free Stock Analysis Report
Equifax, Inc. (EFX) : Free Stock Analysis Report
Maximus, Inc. (MMS) : Free Stock Analysis Report
TransUnion (TRU) : Free Stock Analysis Report
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