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Maximus (MMS) Beats on Earnings in Q3, Declines Marginally
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MAXIMUS, Inc. (MMS - Free Report) third quarter fiscal 2020 earnings and revenues beat the Zacks Consensus Estimate. There has been no impact of the quarterly results on the stock so far.
Earnings per share (EPS) amounted to $1.04, which surpassed the Zacks Consensus Estimate by 33.3% and rose 7.2% year over year. The uptick was driven by new work and expansion of the existing contracts owing to the COVID-19 pandemic and improved outlook in the Australian operations.
Revenues of $901.3 million beat the consensus mark by 11% and increased 23.4% year over year. The year-over-year uptick was driven by the census contract in the U.S. Federal Services Segment and new COVID-19 response work such as contact tracing as well as assistance with unemployment benefits.
Shares of MAXIMUS have inched up 0.8% in the past year against 12.7% growth of the industry it belongs to.
Revenues by Segment
U.S. Health and Human Services segment revenues of $337 million increased 15.7% (all organic) year over year, mainly due to new work, including work tied to COVID-19 response efforts, and the expansion of existing contracts.
U.S. Federal Services segment revenues of $450.1 million surged 54% from the year-ago quarter’s reported figure. In this segment, organic revenue growth was 4.1% driven by new work that included COVID-19 response efforts as well as growth on existing contracts.
Outside the U.S. segment revenues of $114.2 million declined 22.5% year over year on a reported basis. Operating margin in this segment was 3.4%.
Year-to-date signed contract awards at Jun 30, 2020 totaled $1.5 billion and contracts pending (awarded but unsigned) amounted to $672 million. The sales pipeline at Jun 30 was $28.9 billion. This included $1.9 billion in proposals pending, $1.9 billion in proposals in preparation and $25.1 billion in opportunities tracking.
Operating Performance
Operating income of $87.3 million increased 4.4% year over year. Operating margin of 9.7% declined 170 basis points (bps). The operating margin fell due to lower revenue from performance-based contracts and a greater mix of lower margin, cost-plus work related to the Census contract.
Balance Sheet and Cash Flow
This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents balance of $81.5 million compared with $105.6 million in the prior quarter. The company used $13.2 million of cash for operations. Free cash flow is negative $22.5 million. MAXIMUS paid out dividends of $17.2 million.
The company raised its fiscal 2020 guidance. Earnings per share are now expected in the range of $3.20-$3.30 compared with the previous expectation of $2.95 to $3.15. The midpoint ($3.25) of the revised guided range is lower than the current Zacks Consensus Estimate of $3.27.
The company expects revenues of $3.37-$3.42 billion compared with the previous expectation of $3.15-$3.25 billion. The midpoint ($3.39) of the current range is lower than the Zacks Consensus Estimate of $3.40.
Cash flows from operations are expected between $200 million and $220 million compared with the previous expectation of $250 million and $300 million.
Free cash flow is anticipated between $180 million and $200 million compared with the previous projection of $200 million and $250 million.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported second-quarter 2020 adjusted earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 22.1% and increased 14.3% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported second-quarter 2020 adjusted earnings per share of $1.18, which beat the consensus mark by 12.4% but fell 22.9% on a year-over-year basis.
Robert Half (RHI - Free Report) reported second-quarter 2020 earnings of 41 cents per share beat the consensus mark by 17%, but fell 58% year over year.
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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Maximus (MMS) Beats on Earnings in Q3, Declines Marginally
MAXIMUS, Inc. (MMS - Free Report) third quarter fiscal 2020 earnings and revenues beat the Zacks Consensus Estimate. There has been no impact of the quarterly results on the stock so far.
Earnings per share (EPS) amounted to $1.04, which surpassed the Zacks Consensus Estimate by 33.3% and rose 7.2% year over year. The uptick was driven by new work and expansion of the existing contracts owing to the COVID-19 pandemic and improved outlook in the Australian operations.
Revenues of $901.3 million beat the consensus mark by 11% and increased 23.4% year over year. The year-over-year uptick was driven by the census contract in the U.S. Federal Services Segment and new COVID-19 response work such as contact tracing as well as assistance with unemployment benefits.
Shares of MAXIMUS have inched up 0.8% in the past year against 12.7% growth of the industry it belongs to.
Revenues by Segment
U.S. Health and Human Services segment revenues of $337 million increased 15.7% (all organic) year over year, mainly due to new work, including work tied to COVID-19 response efforts, and the expansion of existing contracts.
U.S. Federal Services segment revenues of $450.1 million surged 54% from the year-ago quarter’s reported figure. In this segment, organic revenue growth was 4.1% driven by new work that included COVID-19 response efforts as well as growth on existing contracts.
Outside the U.S. segment revenues of $114.2 million declined 22.5% year over year on a reported basis. Operating margin in this segment was 3.4%.
Maximus, Inc. Price, Consensus and EPS Surprise
Maximus, Inc. price-consensus-eps-surprise-chart | Maximus, Inc. Quote
Sales and Pipeline
Year-to-date signed contract awards at Jun 30, 2020 totaled $1.5 billion and contracts pending (awarded but unsigned) amounted to $672 million. The sales pipeline at Jun 30 was $28.9 billion. This included $1.9 billion in proposals pending, $1.9 billion in proposals in preparation and $25.1 billion in opportunities tracking.
Operating Performance
Operating income of $87.3 million increased 4.4% year over year. Operating margin of 9.7% declined 170 basis points (bps). The operating margin fell due to lower revenue from performance-based contracts and a greater mix of lower margin, cost-plus work related to the Census contract.
Balance Sheet and Cash Flow
This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents balance of $81.5 million compared with $105.6 million in the prior quarter. The company used $13.2 million of cash for operations. Free cash flow is negative $22.5 million. MAXIMUS paid out dividends of $17.2 million.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Outlook
The company raised its fiscal 2020 guidance. Earnings per share are now expected in the range of $3.20-$3.30 compared with the previous expectation of $2.95 to $3.15. The midpoint ($3.25) of the revised guided range is lower than the current Zacks Consensus Estimate of $3.27.
The company expects revenues of $3.37-$3.42 billion compared with the previous expectation of $3.15-$3.25 billion. The midpoint ($3.39) of the current range is lower than the Zacks Consensus Estimate of $3.40.
Cash flows from operations are expected between $200 million and $220 million compared with the previous expectation of $250 million and $300 million.
Free cash flow is anticipated between $180 million and $200 million compared with the previous projection of $200 million and $250 million.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported second-quarter 2020 adjusted earnings of $1.60 per share, which beat the Zacks Consensus Estimate by 22.1% and increased 14.3% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported second-quarter 2020 adjusted earnings per share of $1.18, which beat the consensus mark by 12.4% but fell 22.9% on a year-over-year basis.
Robert Half (RHI - Free Report) reported second-quarter 2020 earnings of 41 cents per share beat the consensus mark by 17%, but fell 58% year over year.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>