A prudent investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bull run.
MAXIMUS, Inc. (MMS - Free Report) has performed well in the past year and has the potential to sustain the momentum in the near term. Consequently, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse in the past year. Shares of MAXIMUS havereturned 17.5%, significantly outperforming the Zacks S&P 500 composite’s rally of 0.4%.
Solid Rank & VGM Score: MAXIMUS has a Zacks Rank #2 (Buy) and a Value Growth Momentum Score (VGM Score) of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Three estimates for fiscal 2019 moved north in the past 60 days versus one downward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2019 inched up 1.1%.
Positive Earnings Surprise History: MAXIMUS has an impressive earnings surprise history. The company outpaced the consensus mark in three of the trailing four quarters and matched estimates in one. Its average four-quarter positive earnings surprise is 9%.
Strong Growth Prospects:The Zacks Consensus Estimate for fiscal 2019 earnings is currently pegged at $3.70, reflecting year-over-year growth of 8.8%. Moreover, earnings are expected to register 11.5% growth in fiscal 2020. The stock has long-term expected earnings per share (EPS) growth rate of 10%.
Growth Drivers: MAXIMUS continues to execute on its three-pronged strategy of digital transformation, clinical evolution and market expansion.
The company is developing new solution sets aimed at achieving operational and cost efficiencies through techniques such as cloud migration services, artificial intelligence, robotic process automation (RPA) and digital automation. It is implementing new digital innovations within business process management and as direct service offerings to enhance the portfolio of citizen services and federal capabilities. On the clinical front, MAXIMUS has undertaken some new program work as a subcontractor, performing medical record indexing and provider outreach and engagement services.
In 2018, MAXIMUS acquired General Dynamics Information Technology's citizen engagement centers to strengthen its U.S. federal services. The acquisition brought in additional cost-plus contracts, enhanced technology and added operational capabilities. The company expects $600-$625 million revenue contribution from this buyout in fiscal 2019.
Other Stocks to Consider
Some other top-ranked stocks in the broader Zacks Business Services sector are Huron Consulting Group (HURN - Free Report) , FLEETCOR Technologies (FLT - Free Report) and Global Payments (GPN - Free Report) , each carrying a Zacks Rank #2.
The long-term expected EPS (three to five years) growth rate for Huron, FLEETCOR and Global Payments is 13.5%, 15.4% and 17%, respectively.
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