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Maximus (MMS) Surges 11% in 3 Months: Should You Buy the Stock?
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Maximus, Inc. (MMS - Free Report) shares have had an impressive run in the past three months. The stock has rallied 11% compared with the 7% growth of its industry and the 8.8% increase of the Zacks S&P 500 composite.
This rally aligns with the performance of its closest competitors, Booz Allen Hamilton (BAH - Free Report) , which has risen 7%, and Accenture (ACN - Free Report) , which has rallied 4% over the same period.
3 Months Price Performance
Image Source: Zacks Investment Research
The stock closed at $89.98 in its last trading session, close to its 52-week high of $92.68, and traded above its 50-day moving average.
APTV Stock Trades Below 50-Day Average
Image Source: Zacks Investment Research
Considering the current strength of MMS shares, investors might be wondering if now is the right time to invest in the stock. Let’s delve deeper into this question.
A Leading Operator of Government Services Programs
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 to governments. Maximus maintains solid relationships and a strong reputation with governments, and long-term contracts provide it with predictable recurring revenue streams. The company continuously seeks long-term relationships with clients in both existing and adjacent markets. It is also focused on expanding its foothold in clinical services as well as long-term services and supports.
Increased longevity and more complex health needs have increased the need for government social benefits and safety-net programs. This should continue driving demand for the company’s services.
Maximus banks on the subject matter expertise of its workforce in the critical aspects of the design, implementation, and operation of government health and human services programs. The company has a strong cash flow from operations due to its profitable business and efficient management of receivables. In the event of an urgent requirement for working capital, the company can borrow $600 million through a credit agreement with JPMorgan Chase N.A. Its expertise in government programs and its ability to deliver defined, measurable outcomes differentiates Maximus. All these factors provide the company with a competitive advantage over its peers.
Consistent Dividend Payer
Commitment to shareholder returns makes Maximus a reliable way for investors to compound wealth over the long term. During fiscal 2023, 2022, and 2021, the company paid cash dividends of $68.1 million, $68.7 million, and $68.8 million, respectively.
Strong Liquidity
Maximus' current ratio (a measure of liquidity) at the end of second-quarter fiscal 2024 was pegged at 1.54. Although lower than the industry’s 1.59, a current ratio of more than 1 indicates that the company should not have problems meeting its short-term obligations.
Image Source: Zacks Investment Research
Top and Bottom-Line Growth Prospects Strong
The Zacks Consensus Estimate for MMS’ third-quarter fiscal 2024 sales stands at $1.28 billion, suggesting year-over-year growth of 7.4%. Revenues for fiscal 2024 are expected to increase 6.8% year over year. The estimate for the third quarter of fiscal 2024 earnings stands at $1.47, suggesting year-over-year growth of 88.5%. Earnings for fiscal 2024 are expected to increase 51.2% year over year.
Is it the Right Time to Buy Now?
The stock closed its last trading session close to its 52-week high and above its 50-day moving average. Therefore, it may be wise for investors to wait for a potential correction.
While MMS remains fundamentally strong, a more advantageous entry point could emerge if the stock undergoes some price adjustment. The company's strong standing as a technology leader, facilitating the transformation of government programs to become dynamic and integrated, indicates significant long-term growth potential, but timing the market entry is crucial for maximizing investment returns.
Image: Bigstock
Maximus (MMS) Surges 11% in 3 Months: Should You Buy the Stock?
Maximus, Inc. (MMS - Free Report) shares have had an impressive run in the past three months. The stock has rallied 11% compared with the 7% growth of its industry and the 8.8% increase of the Zacks S&P 500 composite.
This rally aligns with the performance of its closest competitors, Booz Allen Hamilton (BAH - Free Report) , which has risen 7%, and Accenture (ACN - Free Report) , which has rallied 4% over the same period.
3 Months Price Performance
The stock closed at $89.98 in its last trading session, close to its 52-week high of $92.68, and traded above its 50-day moving average.
APTV Stock Trades Below 50-Day Average
Image Source: Zacks Investment Research
Considering the current strength of MMS shares, investors might be wondering if now is the right time to invest in the stock. Let’s delve deeper into this question.
A Leading Operator of Government Services Programs
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 to governments. Maximus maintains solid relationships and a strong reputation with governments, and long-term contracts provide it with predictable recurring revenue streams. The company continuously seeks long-term relationships with clients in both existing and adjacent markets. It is also focused on expanding its foothold in clinical services as well as long-term services and supports.
Increased longevity and more complex health needs have increased the need for government social benefits and safety-net programs. This should continue driving demand for the company’s services.
Maximus banks on the subject matter expertise of its workforce in the critical aspects of the design, implementation, and operation of government health and human services programs. The company has a strong cash flow from operations due to its profitable business and efficient management of receivables. In the event of an urgent requirement for working capital, the company can borrow $600 million through a credit agreement with JPMorgan Chase N.A. Its expertise in government programs and its ability to deliver defined, measurable outcomes differentiates Maximus. All these factors provide the company with a competitive advantage over its peers.
Consistent Dividend Payer
Commitment to shareholder returns makes Maximus a reliable way for investors to compound wealth over the long term. During fiscal 2023, 2022, and 2021, the company paid cash dividends of $68.1 million, $68.7 million, and $68.8 million, respectively.
Strong Liquidity
Maximus' current ratio (a measure of liquidity) at the end of second-quarter fiscal 2024 was pegged at 1.54. Although lower than the industry’s 1.59, a current ratio of more than 1 indicates that the company should not have problems meeting its short-term obligations.
Top and Bottom-Line Growth Prospects Strong
The Zacks Consensus Estimate for MMS’ third-quarter fiscal 2024 sales stands at $1.28 billion, suggesting year-over-year growth of 7.4%. Revenues for fiscal 2024 are expected to increase 6.8% year over year. The estimate for the third quarter of fiscal 2024 earnings stands at $1.47, suggesting year-over-year growth of 88.5%. Earnings for fiscal 2024 are expected to increase 51.2% year over year.
Is it the Right Time to Buy Now?
The stock closed its last trading session close to its 52-week high and above its 50-day moving average. Therefore, it may be wise for investors to wait for a potential correction.
While MMS remains fundamentally strong, a more advantageous entry point could emerge if the stock undergoes some price adjustment. The company's strong standing as a technology leader, facilitating the transformation of government programs to become dynamic and integrated, indicates significant long-term growth potential, but timing the market entry is crucial for maximizing investment returns.
MMS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.