MAXIMUS, Inc. ( MMS Quick Quote MMS - Free Report) has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth. The company’s earnings for fiscal 2021 are expected to grow 7.1% year over year.
The stock has gained 11.5% in the past three months, outperforming the 10.1% rally of the
industry it belongs to. Factors That Auger Well
With more than 40 years of experience, MAXIMUS has grown to be a leading operator of government health and human services programs globally. The company’s business-process management expertise and ability to deliver cost-effective, efficient and high-scale solutions position it as a lucrative partner for governments. MAXIMUS maintains solid relationships and strong reputation with governments, and long-term contracts provide it with predictable recurring-revenue streams.
MAXIMUS has a diversified portfolio with high operating profit margin, high cash conversion and access to a $400 million credit facility. The company’s financial flexibility enables it to pursue business investment and strategic acquisition opportunities as well as reward shareholders through dividends.
MAXIMUS’ debt level has decreased quarter over quarter. Total debt at the end of fourth-quarter fiscal 2020 was $29 million, compared with $152 million at the end of the prior quarter. The total-debt-to-total-capital ratio of 0.02 was lower than the previous quarter’s 0.11 and the industry’s 0.60. Lower debt-to-capitalization ratio indicates that the proportion of debt to finance the company’s assets is declining and so is the risk of insolvency. Further, cash and cash equivalent balance of $72 million at the end of the fourth-quarter fiscal 2020 was enough to meet the short-term debt of $11 million.
A Hurdle to Counter
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 9.2% year over year in the fourth quarter of fiscal 2020, with the operating loss amounting to $0.6 million. The segment has experienced the highest impact of the coronavirus pandemic.
Other Stocks to Consider
MAXIMUS currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks
Business Services sector are ManpowerGroup ( MAN Quick Quote MAN - Free Report) , FactSet Research ( FDS Quick Quote FDS - Free Report) and Cross Country Healthcare ( CCRN Quick Quote CCRN - Free Report) , each carrying a Zacks #2 Rank (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
The long-term expected earnings per share (three to five years) growth rate for ManpowerGroup, FactSet and Cross Country Healthcare is 3.5%, 8.5% and 12%, respectively.
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