A prudent investment decision involves buying stocks that have solid prospects and selling those that carry risks. At times, it is rational to hold certain stocks that have enough potential but are weighed down by tough market conditions.
We believe that MAXIMUS, Inc. (MMS - Free Report) with a VGM Score of B and market cap of $4.6 billion is a stock that investors should retain in their portfolio.
Factors Benefiting the Company
Technology investments and strong capabilities in citizen engagement and complex program administration make MAXIMUS a trusted partner to governments. To sustain the quality of its services amid the pandemic, the company is using a hybrid operational model, maintaining delivery through a mix of work-from-home arrangements and safe, on-site working arrangements.
MAXIMUS’s performance remains strong, thanks to the census contract in the U.S. Federal Services Segment and new COVID-19-response work such as contact tracing and assistance with unemployment benefits. The company’s earnings of $1.04 per share rose 7.2% year over year in third-quarter fiscal 2020. Revenues of $901.3 million increased 23.4%.
Maximus, Inc. Revenue (TTM)
Maximus remains a consistent dividend payer amid the pandemic. The company announced a quarterly cash dividend of 28 cents in May and August. Also, during fiscal 2019, the company paid cash dividends of $63.9 million. It paid dividends worth $11.7 million to its shareholders during each of the fiscal years 2018, 2017 and 2016.
Poor performance of the Outside the U.S. segment has been weighing on MAXIMUS’ top line and margins for quite some time. The segment’s revenues declined 22.5% year over year in the third quarter of fiscal 2020, with the operating loss amounting to $5.8 million.
The company’s cash and cash equivalent of $82 million at the end of third-quarter fiscal 2020 was well below the $145 million long-term debt level, underscoring that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $7 million.
Zacks Rank and Stocks to Consider
MAXIMUS currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are TeleTech Holdings (TTEC - Free Report) , BG Staffing, Inc. (BGSF - Free Report) and Elastic N.V. (ESTC - Free Report) . While CoreLogic and BG Staffing sport a Zacks Rank #1 Elastic carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for TeleTech, BG Staffing and Elastic is 7.9%, 20% and 26%, respectively.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
With users in 180 countries and soaring revenues, it’s set to thrive on remote working long after the pandemic ends. No wonder it recently offered a stunning $600 million stock buy-back plan.
The sky’s the limit for this emerging tech giant. And the earlier you get in, the greater your potential gain.
Click Here, See It Free >>