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MAXIMUS, Inc. (MMS - Snapshot Report) recently reported fourth quarter EPS of 99 cents, beating the Zacks Consensus Estimate by 3 cents. Analysts' estimates moved higher off the strong quarter, sending the stock to a Zacks #2 Rank (Buy). Based on the Zacks Consensus Estimate, analysts are expecting solid 13% EPS growth in both 2011 and 2012.

The company has also been returning value to shareholders in the form of stock buybacks and a dividend increase. Valuation is reasonable, too, with shares trading at 17.4x forward earnings, below the industry average.

Company Description

MAXIMUS, Inc. provides government services and health and human services program management and consulting services to its clients. It has more than 220 offices in the United States, Canada, Australia, and the United Kingdom.

Fourth Quarter Results

MAXIMUM reported its results for the fourth quarter on February 3. Revenue was up 5.3% year-over-year driven by the international employment services businesses in Australia and the United Kingdom in the Human Services Segment.

The gross margin expanded from 25.7% of sales to 26.1%. Earnings per share came in at 99 cents, beating the Zacks Consensus Estimate by 3 cents. It was a 14% increase over the same quarter in 2009.

Outlook

Management reiterated its guidance for 2011 following Q4 results. The company expects to earn $3.95 to $4.15 per share in 2011. The Zacks Consensus Estimate within guidance at $4.09, representing 13% growth over 2010 estimates.

The 2012 consensus estimate is also 13% higher at $4.63. It is a Zacks #2 Rank (Buy) stock.

Returning Value to Shareholders

The company spent $8.4 million to purchase 136,153 shares of common stock in the quarter. As of December 31, 2010, MAXIMUS had $118.6 million available under its current repurchase program.

The company also recently raised its quarterly dividend 25% from 12 cents per share to 15 cents. This marks just the second dividend hike since the company began paying a dividend in 2005. It currently yields 0.9%.

Valuation

The stock is up over 30% since September 1:

MMS: MAXIMUS, Inc.

Shares trade at 17.4x forward earnings, a discount to the industry average of 19.0x. Its price to sales ratio of 1.4 is in-line with its peers.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

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