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Maximus (MMS) Down 5.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Maximus (MMS - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Maximus due for a breakout? 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 Surpasses Q2 Earnings & Revenues Estimates
MAXIMUS reported better-than-expected second-quarter fiscal 2022 results.
Quarterly adjusted earnings (excluding 27 cents from non-recurring items) of $1.07 per share surpassed the Zacks Consensus Estimate by 9.2% but decreased 17.1% year over year.
Revenues of $1.17 billion beat the consensus mark 8.6% and increased 22.7% year over year. The uptick was driven by contributions from the acquisitions in the U.S. Federal Services segment and start-ups ramping in the Outside the U.S. segment.
Sales and Pipeline
The U.S. Services segment’s revenues of $398.1 million decreased 11.2% year over year, mainly due to the expected reduction in short-term COVID-19 response work. The U.S. Federal Services segment’s revenues of $573.3 million rose 73.7% from the year-ago quarter’s reported figure. The uptick was driven by the Attain Federal, VES and Aidvantage acquisitions. Outside the U.S. segment, revenues of $206 million increased 13.8% year over year, driven by ramping of startups, mainly the U.K. Restart Program.
Year-to-date signed contract awards on Mar 31, 2022, totaled $1.47 billion while contracts pending (awarded but unsigned) amounted to $1.75 billion. The sales pipeline on Mar 31, 2022, was $29.8 billion. This included $7.4 billion of pending proposals, $3.6 billion worth of proposals in preparation and $18.8 billion as opportunities tracking.
Operating Performance
Operating income of $75.3 million declined 33.5% year over year. Operating income margin of 6.4% was lower than the year-ago quarter’s figure of 11.8%.
Balance Sheet and Cash Flow
MAXIMUS ended the quarter with cash and cash equivalents of $92.6 million compared with $135.1 million in the prior quarter. MMS used $114.8 million of cash in operations while capital expenditures were $16.6 million. Free cash flow amounted to $98.2 million. MAXIMUS paid out dividends worth $17.3 million.
2022 Outlook
Adjusted earnings per share are currently anticipated in the range of $3.00-$3.50 (previous view: $4.00-$4.30). Trimmed EPS guidance can be attributed to three reasons: Public health emergency is extended through mid-July, delays on ramping of new work in the U.S. Services and Outside the U.S. segments and revised expectations for the Australia employment services.
MMS is maintaining revenue guidance for fiscal 2022. MAXIMUS continues to expect revenues in the range of $4.5-$4.7 billion. Cash flows from operations are expected between $225 million and $300 million (prior view: $275 million and $325 million). Free cash flow is anticipated in the range of $175-$250 million (prior view: $225-$275 million). The effective tax rate is predicted in the range of 24.525.5% (prior view: 25-26%). Weighted average shares outstanding are projected in the range of 62-62.2 million (prior view: 62.5-62.6 million).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -33.78% due to these changes.
VGM Scores
Currently, Maximus has a great Growth Score of A, though it is lagging a lot on the Momentum Score front 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Maximus has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Maximus (MMS) Down 5.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Maximus (MMS - Free Report) . Shares have lost about 5.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Maximus due for a breakout? 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 Surpasses Q2 Earnings & Revenues Estimates
MAXIMUS reported better-than-expected second-quarter fiscal 2022 results.
Quarterly adjusted earnings (excluding 27 cents from non-recurring items) of $1.07 per share surpassed the Zacks Consensus Estimate by 9.2% but decreased 17.1% year over year.
Revenues of $1.17 billion beat the consensus mark 8.6% and increased 22.7% year over year. The uptick was driven by contributions from the acquisitions in the U.S. Federal Services segment and start-ups ramping in the Outside the U.S. segment.
Sales and Pipeline
The U.S. Services segment’s revenues of $398.1 million decreased 11.2% year over year, mainly due to the expected reduction in short-term COVID-19 response work. The U.S. Federal Services segment’s revenues of $573.3 million rose 73.7% from the year-ago quarter’s reported figure. The uptick was driven by the Attain Federal, VES and Aidvantage acquisitions. Outside the U.S. segment, revenues of $206 million increased 13.8% year over year, driven by ramping of startups, mainly the U.K. Restart Program.
Year-to-date signed contract awards on Mar 31, 2022, totaled $1.47 billion while contracts pending (awarded but unsigned) amounted to $1.75 billion. The sales pipeline on Mar 31, 2022, was $29.8 billion. This included $7.4 billion of pending proposals, $3.6 billion worth of proposals in preparation and $18.8 billion as opportunities tracking.
Operating Performance
Operating income of $75.3 million declined 33.5% year over year. Operating income margin of 6.4% was lower than the year-ago quarter’s figure of 11.8%.
Balance Sheet and Cash Flow
MAXIMUS ended the quarter with cash and cash equivalents of $92.6 million compared with $135.1 million in the prior quarter. MMS used $114.8 million of cash in operations while capital expenditures were $16.6 million. Free cash flow amounted to $98.2 million. MAXIMUS paid out dividends worth $17.3 million.
2022 Outlook
Adjusted earnings per share are currently anticipated in the range of $3.00-$3.50 (previous view: $4.00-$4.30). Trimmed EPS guidance can be attributed to three reasons: Public health emergency is extended through mid-July, delays on ramping of new work in the U.S. Services and Outside the U.S. segments and revised expectations for the Australia employment services.
MMS is maintaining revenue guidance for fiscal 2022. MAXIMUS continues to expect revenues in the range of $4.5-$4.7 billion. Cash flows from operations are expected between $225 million and $300 million (prior view: $275 million and $325 million). Free cash flow is anticipated in the range of $175-$250 million (prior view: $225-$275 million). The effective tax rate is predicted in the range of 24.525.5% (prior view: 25-26%). Weighted average shares outstanding are projected in the range of 62-62.2 million (prior view: 62.5-62.6 million).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -33.78% due to these changes.
VGM Scores
Currently, Maximus has a great Growth Score of A, though it is lagging a lot on the Momentum Score front 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Maximus has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.