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MMS Stock Rises 15.7% in Three Months: Here's What You Should Know
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Key Takeaways
MMS shares gained 15.7% in three months, outpacing the industry's 8% rise as defense expansion fuels growth.
AI features in 75-80% of new bids & rebids, while AI enhancements across five contracts boosted margins.
MMS repurchased $50.4 million in shares in Q3 and projects fiscal 2026 free cash flow of $425-$475 million.
Maximus (MMS - Free Report) stock has gained 15.7% over the past three months, outperforming the industry’s 8% growth. The Zacks S&P 500 Composite declined 3% during that time frame.
MMS’ Three-Month Share Price Performance
Image Source: Zacks Investment Research
Let us delve deeper into the factors that have contributed to the company’s outperformance.
Defense Expansion Drives Long-Term Revenue Growth
Maximus is expanding its presence in defense and national security to diversify revenues and capture new growth opportunities. Management estimates an addressable market of nearly $47 billion, with only a small portion reflected in its current sales pipeline. Recent contract wins with the Air Force and Transportation Security Administration highlight its growing presence in this market. The company is also pursuing alternative procurement channels, including Other Transaction Authorities, to broaden customer access. Continued investments in technology-enabled solutions and government partnerships should strengthen its competitive position, support future contract wins and drive long-term revenue growth.
Growing AI Adoption Boosts Efficiency and Revenue
Maximus is expanding its AI-enabled solutions to enhance service delivery, improve operational efficiency and strengthen its competitive position in government contracting. Approximately 75-80% of new bids and rebids in its pipeline include AI-related requirements, reflecting growing demand for technology-driven services. AI enhancements across five existing contracts contributed to a 3.5-percentage-point improvement in operating margins for that group. Continued investments in automation, conversational AI and strategic partnerships, including Spectro Cloud, should enhance contract competitiveness, support margin expansion and create new revenue opportunities as government agencies modernize operations.
Disciplined Capital Allocation & Liquidity to Support Growth
Maximus continues to reward shareholders while maintaining financial flexibility and disciplined leverage. During the first nine months of fiscal 2026, dividends rose to 96 cents per share from 90 cents a year earlier. The company repurchased approximately 0.75 million shares for $50.4 million in the third quarter, bringing cumulative buybacks since fiscal 2025 to 8.3 million shares or 14% of beginning shares outstanding. At June 30, 2026, $400 million remained available for repurchases. Net leverage stood at 2X, within the targeted 2X-3X range, supported by $57 million in cash and approximately $730 million in available revolving credit. Despite elevated receivables, collections of $245 million after the third quarter-end support management’s expectation of reducing days sales outstanding from 98 days to below 70 days by fiscal year-end. Fiscal 2026 free cash flow guidance of $425-$475 million further supports investments and shareholder returns.
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MMS Stock Rises 15.7% in Three Months: Here's What You Should Know
Key Takeaways
Maximus (MMS - Free Report) stock has gained 15.7% over the past three months, outperforming the industry’s 8% growth. The Zacks S&P 500 Composite declined 3% during that time frame.
MMS’ Three-Month Share Price Performance
Image Source: Zacks Investment Research
Let us delve deeper into the factors that have contributed to the company’s outperformance.
Defense Expansion Drives Long-Term Revenue Growth
Maximus is expanding its presence in defense and national security to diversify revenues and capture new growth opportunities. Management estimates an addressable market of nearly $47 billion, with only a small portion reflected in its current sales pipeline. Recent contract wins with the Air Force and Transportation Security Administration highlight its growing presence in this market. The company is also pursuing alternative procurement channels, including Other Transaction Authorities, to broaden customer access. Continued investments in technology-enabled solutions and government partnerships should strengthen its competitive position, support future contract wins and drive long-term revenue growth.
Growing AI Adoption Boosts Efficiency and Revenue
Maximus is expanding its AI-enabled solutions to enhance service delivery, improve operational efficiency and strengthen its competitive position in government contracting. Approximately 75-80% of new bids and rebids in its pipeline include AI-related requirements, reflecting growing demand for technology-driven services. AI enhancements across five existing contracts contributed to a 3.5-percentage-point improvement in operating margins for that group. Continued investments in automation, conversational AI and strategic partnerships, including Spectro Cloud, should enhance contract competitiveness, support margin expansion and create new revenue opportunities as government agencies modernize operations.
Disciplined Capital Allocation & Liquidity to Support Growth
Maximus continues to reward shareholders while maintaining financial flexibility and disciplined leverage. During the first nine months of fiscal 2026, dividends rose to 96 cents per share from 90 cents a year earlier. The company repurchased approximately 0.75 million shares for $50.4 million in the third quarter, bringing cumulative buybacks since fiscal 2025 to 8.3 million shares or 14% of beginning shares outstanding. At June 30, 2026, $400 million remained available for repurchases. Net leverage stood at 2X, within the targeted 2X-3X range, supported by $57 million in cash and approximately $730 million in available revolving credit. Despite elevated receivables, collections of $245 million after the third quarter-end support management’s expectation of reducing days sales outstanding from 98 days to below 70 days by fiscal year-end. Fiscal 2026 free cash flow guidance of $425-$475 million further supports investments and shareholder returns.
MMS’ Zacks Rank & Stocks to Consider
Maximus currently carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader Business Services sector are Veralto Corporation (VLTO - Free Report) and EVERTEC, Inc. (EVTC - Free Report) .
Veralto carries a Zacks Rank #2 (Buy) at present. It has a long-term earnings growth expectation of 8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
VLTO beat earnings estimates in each of the trailing four quarters, delivering an earnings surprise of 7.3% on average.
EVERTEC also carries a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 9.9%.
EVTC beat earnings estimates in three of the trailing four quarters and missed once, with an average earnings surprise of 5.5%.