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MAXIMUS, Inc. (NYSE:MMS), which is in the it business, and is based in United States, had a relatively subdued couple of weeks in terms of changes in share price, which continued to float around the range of $68.98 to $73.88. However, is this the true valuation level of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at MAXIMUS’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in MAXIMUS?
According to my valuation model, MAXIMUS seems to be fairly priced at around 13% below my intrinsic value, which means if you buy MAXIMUS today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $84.55, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, MAXIMUS’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from MAXIMUS?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 21% over the next couple of years, the future seems bright for MAXIMUS. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? MMS’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on MMS, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on MAXIMUS. You can find everything you need to know about MAXIMUS in the latest infographic research report. If you are no longer interested in MAXIMUS, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.