It has been about a month since the last earnings report for Maximus (
MMS Quick Quote MMS - Free Report) . Shares have lost about 5.6% 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 drivers.
MAXIMUS Beats Q1 Earnings Estimate MAXIMUS, Inc. ( MMS Quick Quote MMS - Free Report) reported impressive first-quarter fiscal 2023 results with both earnings and revenues beating the Zacks consensus estimate.
Quarterly adjusted earnings of 94 cents per share beat the Zacks Consensus Estimate by 19% but declined 16.1% year over year. Revenues of $1.25 billion beat the consensus mark by 8.4% and increased 8.6% year over year.
The U.S. Services segment’s revenues of $439.5 million rose 13.7% year over year. The U.S. Federal Services segment’s revenues of $618.2 million increased 6.2% from the year-ago quarter. Outside the U.S. segment’s revenues of $191.6 million increased 4.9% year over year.
Sales and Pipeline
Signed contract awards on Dec 31 totaled $481 million, and contracts pending (awarded but unsigned) amounted to $661 million. The sales pipeline on Dec 31 was $30.5 billion. This included $6 billion in pending proposals, $1.71 billion in proposals in preparation and $22.8 billion in opportunities tracking.
Adjusted operating income of $98.3 million decreased 5.4% year over year. The operating income margin of 7.9% declined 110 basis points year over year.
Balance Sheet and Cash Flow
MAXIMUS ended the quarter with cash and cash equivalents of $63.1 million compared with $40.7 million in the prior quarter.
The company used $134.7 million in cash from operations. Capital expenditures were $15.7 million. Free cash flow amounted to $150.4 million.
MAXIMUS raised its 2023 adjusted EPS guidance to $4-$4.3 from the previous view of $3.7-$4. The company raised its 2023 revenue guidance to $4.85-$5 billion from the previous view of $4.75-$4.9.
Adjusted operating income is expected between $415 million and $440 million compared with the previous guidance of $390-$415 million. Free cash flow is still anticipated in the range of $225-$275 million. The effective tax rate is anticipated in the range of 24.5-25.5%. Weighted average shares outstanding are projected in the range of 61.2-61.3 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -12.5% due to these changes.
At this time, Maximus has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Maximus has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.