A month has gone by since the last earnings report for Maximus (MMS Quick QuoteMMS - Free Report) . Shares have added about 1.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Maximus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Maximus Misses Q3 Earning Estimates

Maximus, Inc.’s third-quarter fiscal 2023 earnings and revenues missed the Zacks Consensus Estimate.

Maximus currently expects adjusted earnings to be in the range of $3.74-$3.94 per share compared with the previous guidance of $4.00-$4.30 per share.

Fiscal 2023 revenues are expected to be in the range of $4.875-$4.975 billion compared with the previous guidance of $4.85-$5 billion.

Quarterly adjusted earnings of 78 cents per share missed the Zacks Consensus Estimate by 31.6% and remained flat year over year. Revenues of $1.19 billion lagged the consensus mark by 1.3% but increased 5.6% year over year.

Segmental Revenues

The U.S. Services segment’s revenues of $449.1 million grew 12.5% year over year and beat our estimate of $434 million. The U.S. Federal Services segment’s revenues of $584 million increased 11.1% from the year-ago reported number and surpassed our estimate of $578.3 million. The Outside the U.S. segment’s revenues of $155.7 million decreased 22.5% year over year and lagged our estimate of $191.2 million.

Sales and Pipeline

Year-to-date signed contract awards, as of Jun 30, totaled $4.27 billion and contracts pending (awarded but unsigned) amounted to $3.1 billion. The sales pipeline as of Jun 30 was $32.1 billion. This included $2.6 billion in pending proposals, $0.84 billion in proposals in preparation and $28.7 billion in opportunities tracking.

The book-to-bill ratio as of Jun 30, 2023, was 2.2x. The book-to-bill ratio, excluding the Contact Center Operations contract of $6.6 billion received in September 2022, was 1.1x as of Jun 30, 2023.

Operating Performance

Adjusted operating income of $81.8 million increased 5.9% year over year. This compares with our expected adjusted operating income of $113.7 million, up 47.2% year over year.

Adjusted operating income margin of 6.9% remained flat year over year. This compares with our expected adjusted operating income margin of 9.4%, up 250 basis points year over year.

Balance Sheet and Cash Flow

Maximus ended the quarter with a cash and cash equivalents balance of $35 million compared with $56.3 million reported at the end of the prior quarter.

The company used $5.3 million in cash from operations. Capital expenditures were $25.1 million and free cash flow amounted to $30.4 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -12.49% due to these changes.

VGM Scores

Currently, Maximus has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

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 #3 (Hold). We expect an in-line return from the stock in the next few months.