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MAXIMUS (MMS) Stock Drops 3.7% In Spite of Q3 Earnings Beat
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MAXIMUS, Inc. (MMS - Free Report) reported better-than-expected third-quarter fiscal 2021 results. However, strong results failed to impress the market as the stock has plunged 3.7% since earnings release on Aug 5.
Earnings per share (EPS) in the third quarter (excluding 15 cents from non-recurring items) amounted to $1.66, which surpassed the Zacks Consensus Estimate by 48.2% and surged 59.6% year over year. The bottom line was primarily driven by surge in operating income.
Revenues of $1.2 billion beat the consensus mark by 13.3% and increased 38% year over year. The uptick was driven by new COVID-19 response work such as vaccination distribution support services, unemployment insurance program support, disease investigation, contact tracing and other key initiatives.
Shares of MAXIMUS have gained 6.7% in the past year, against 0.2% decline of the industry it belongs to.
Image Source: Zacks Investment Research
Segmental Revenues
U.S. Services segment revenues of $436.3 million increased 29% (all organic) year over year, mainly owing to new work. The uptick was primarily driven by an estimated $164 million of COVID-response work.
U.S. Federal Services segment revenues of $617.6 million rose 37.2% from the year-ago quarter’s reported figure. The uptick was due to increase in COVID-19 response work that exceeded company expectations and contributed $280 million of revenues to the segment.
Outside the U.S. segment, revenues of $189.6 million increased 66% year over year on a reported basis. This segment realized growth driven by efficient operations in Australia, where market conditions continued to create and sustain job opportunities.
Year-to-date signed contract awards on Jun 30, 2021, totaled $3.2 billion and contracts pending (awarded but unsigned) amounted to $1.4 billion. The sales pipeline at Jun 30, 2021, was $33.6 billion. This included $4.2 billion in proposals pending, $6.8 billion in proposals in preparation and $22.6 billion in opportunities tracking.
Operating Performance
Operating income of $139.6 million increased 60% year over year. Operating income margin of 11.2% surged 150 basis points (bps) year over year.
Balance Sheet and Cash Flow
This Zacks Rank #3 (Hold) company ended fiscal third quarter with cash and cash equivalents of $96.1 million compared with $101.7 million in the prior quarter. The company used $33 million of cash from operations. Free cash flow is $41.6 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.
Raised 2021 Outlook
For the third consecutive quarter, Maximus is increasing revenues, earnings and cash flow guidance for fiscal 2021.
MAXIMUS expects EPS in the range of $4.65-$4.75 (previous outlook: $4.20-$4.40). The raised guidance is above the Zacks Consensus Estimate is pegged at $4.54 per share.
It expects revenues in the range of $4.2-$4.25 billion (previous outlook: $4.0-$4.2 billion). The raised view is higher than the Zacks Consensus Estimate of $4.15 billion.
Cash flows from operations are expected between $425 million and $455 million (previous guidance: $400 million and $450 million). Free cash flow is anticipated in the range of $375-$405 million (previous guidance: $360-$410 million).
Effective tax rate is anticipated in the range of 25-25.5% (previous guidance: 26-27%) and weighted average shares outstanding to be approximately 62.3 million. (previous guidance: 62.2 million and 62.3 million).
Performance of Some Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected second-quarter 2021 results. Adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and increased 23.8% on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and increased 25.6% year over year.
IHS Markit’s second-quarter fiscal 2021 adjusted earnings per share of 81 cents beat the consensus mark by 1.3% and increased 17.4% on a year-over-year basis. Total revenues came in at $1.2 billion, surpassing the consensus mark by 3.8% and increasing 15% from the year-ago quarter’s levels.
Omnicom (OMC - Free Report) reported second-quarter 2021 adjusted earnings of $1.46 per share that beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.
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MAXIMUS (MMS) Stock Drops 3.7% In Spite of Q3 Earnings Beat
MAXIMUS, Inc. (MMS - Free Report) reported better-than-expected third-quarter fiscal 2021 results. However, strong results failed to impress the market as the stock has plunged 3.7% since earnings release on Aug 5.
Earnings per share (EPS) in the third quarter (excluding 15 cents from non-recurring items) amounted to $1.66, which surpassed the Zacks Consensus Estimate by 48.2% and surged 59.6% year over year. The bottom line was primarily driven by surge in operating income.
Revenues of $1.2 billion beat the consensus mark by 13.3% and increased 38% year over year. The uptick was driven by new COVID-19 response work such as vaccination distribution support services, unemployment insurance program support, disease investigation, contact tracing and other key initiatives.
Shares of MAXIMUS have gained 6.7% in the past year, against 0.2% decline of the industry it belongs to.
Image Source: Zacks Investment Research
Segmental Revenues
U.S. Services segment revenues of $436.3 million increased 29% (all organic) year over year, mainly owing to new work. The uptick was primarily driven by an estimated $164 million of COVID-response work.
U.S. Federal Services segment revenues of $617.6 million rose 37.2% from the year-ago quarter’s reported figure. The uptick was due to increase in COVID-19 response work that exceeded company expectations and contributed $280 million of revenues to the segment.
Outside the U.S. segment, revenues of $189.6 million increased 66% year over year on a reported basis. This segment realized growth driven by efficient operations in Australia, where market conditions continued to create and sustain job opportunities.
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 on Jun 30, 2021, totaled $3.2 billion and contracts pending (awarded but unsigned) amounted to $1.4 billion. The sales pipeline at Jun 30, 2021, was $33.6 billion. This included $4.2 billion in proposals pending, $6.8 billion in proposals in preparation and $22.6 billion in opportunities tracking.
Operating Performance
Operating income of $139.6 million increased 60% year over year. Operating income margin of 11.2% surged 150 basis points (bps) year over year.
Balance Sheet and Cash Flow
This Zacks Rank #3 (Hold) company ended fiscal third quarter with cash and cash equivalents of $96.1 million compared with $101.7 million in the prior quarter. The company used $33 million of cash from operations. Free cash flow is $41.6 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.
Raised 2021 Outlook
For the third consecutive quarter, Maximus is increasing revenues, earnings and cash flow guidance for fiscal 2021.
MAXIMUS expects EPS in the range of $4.65-$4.75 (previous outlook: $4.20-$4.40). The raised guidance is above the Zacks Consensus Estimate is pegged at $4.54 per share.
It expects revenues in the range of $4.2-$4.25 billion (previous outlook: $4.0-$4.2 billion). The raised view is higher than the Zacks Consensus Estimate of $4.15 billion.
Cash flows from operations are expected between $425 million and $455 million (previous guidance: $400 million and $450 million). Free cash flow is anticipated in the range of $375-$405 million (previous guidance: $360-$410 million).
Effective tax rate is anticipated in the range of 25-25.5% (previous guidance: 26-27%) and weighted average shares outstanding to be approximately 62.3 million. (previous guidance: 62.2 million and 62.3 million).
Performance of Some Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected second-quarter 2021 results. Adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and increased 23.8% on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and increased 25.6% year over year.
IHS Markit’s second-quarter fiscal 2021 adjusted earnings per share of 81 cents beat the consensus mark by 1.3% and increased 17.4% on a year-over-year basis. Total revenues came in at $1.2 billion, surpassing the consensus mark by 3.8% and increasing 15% from the year-ago quarter’s levels.
Omnicom (OMC - Free Report) reported second-quarter 2021 adjusted earnings of $1.46 per share that beat the consensus mark by 9.8% and increased 58.7% year over year. Total revenues of $3.6 billion surpassed the consensus estimate by 6.7% and increased 27.5% year over year.