Why Is Maximus (MMS) Up 8.6% Since Last Earnings Report?
A month has gone by since the last earnings report for Maximus (MMS). Shares have added about 8.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Maximus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Maximus Beats Q1 Earnings Estimates
Maximus, Inc.’s reported impressive first-quarter fiscal 2024 results, with both earnings and revenues beating the Zacks Consensus Estimate.
Quarterly adjusted earnings of $1.34 per share surpassed the Zacks Consensus Estimate by 4.7% and increased 42.6% year over year. Revenues of $1.33 billion beat the consensus mark by 3.5% and increased 6.2% year over year.
Segmental Revenues
The U.S. Services segment’s revenues of $489.8 million grew 11.5% year over year and beat our estimate of $479.3 million. The U.S. Federal Services segment’s revenues of $677.1 million increased 9.5% from the year-ago reported number and surpassed our estimate of $614.2 million. The Outside the U.S. segment’s revenues of $160.1 million decreased 16.4% year over year and lagged our estimate of $186.1 million.
Sales and Pipeline
Year-to-date signed contract awards, as of Dec 31, totaled $422 million and contracts pending (awarded but unsigned) amounted to $802 million. The sales pipeline, as of Dec 31, was $37.7 billion. This included $933 million in pending proposals, $1.01 billion in proposals in preparation and $35.7 billion in opportunities tracking. The book-to-bill ratio as of Dec 31, 2023, was 1.2x.
Operating Performance
Adjusted operating income of $131.9 million increased 34.1% year over year. This compares with our expected adjusted operating income of $122.6 million, up 24.8% year over year.
Adjusted operating income margin of 9.9% increased 200 basis points year over year. This compares with our expected adjusted operating income margin of 9.6%, up 170 basis points year over year.
Balance Sheet and Cash Flow
Maximus ended the quarter with a cash and cash equivalents balance of $104.2 million compared with $65.4 million reported at the end of the prior quarter.
The company generated $21.6 million in cash from operations. Capital expenditures were $22.2 million and free cash outflow amounted to $639 million.
Fiscal 2024 Guidance
The company continues to expect fiscal 2024 revenues to be in the range of $5.05-$5.2 billion.
Free cash flow is now anticipated to range between $300 million and $350 million compared with the prior guidance of $290 million to $340 million. Maximus expects interest expense of around $73 million, an effective income tax rate of 24.5% to 25.5%, and weighted average shares outstanding between 62.2 million and 62.2 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
VGM Scores
Currently, Maximus has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Maximus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Maximus belongs to the Zacks Government Services industry. Another stock from the same industry, Booz Allen Hamilton (BAH), has gained 2.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Booz Allen reported revenues of $2.57 billion in the last reported quarter, representing a year-over-year change of +12.9%. EPS of $1.41 for the same period compares with $1.07 a year ago.
For the current quarter, Booz Allen is expected to post earnings of $1.24 per share, indicating a change of +22.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +0% over the last 30 days.
Booz Allen has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.
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