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However, the stock has lost 2.1% since the earnings release on Nov 19 as the company posted weak earnings guidance for fiscal 2021. It expects earnings per share (EPS) in the range of $3.45-$3.70, the midpoint ($3.57) of which is lower than the Zacks Consensus Estimate of $3.67.
EPS for the fourth quarter amounted to $1.02, which surpassed the Zacks Consensus Estimate by 12.1% and rose 9.7% year over year. Revenues of $923.8 million beat the consensus mark by 6.6% and increased 22.4% year over year. The uptick was driven by the Census contract in the U.S. Federal Services Segment and new COVID-19 response work to assist governments in supporting individuals and families during the coronavirus pandemic.
Shares of MAXIMUS have lost 3.5% in the year-to-date period against 10.9% growth of the industry it belongs to.
Segmental Revenues
U.S. Services segment (previously named as U.S. Health & Human Services Segment) revenues of $371.3 million increased 23.6% (all organic) year over year, mainly due to new work. This includes work tied to COVID-19 response efforts and the expansion of existing contracts.
U.S. Federal Services segment revenues of $423.2 million surged 35.6% from the year-ago quarter’s reported figure. This segment realized growth from new contracts and new work related to the COVID-19 response efforts.
Outside the U.S. segment revenues of $129.3 million declined 9.2% year over year on a reported basis. This segment has experienced the highest impact of pandemic.
Year-to-date signed contract awards at Sep 30, 2020 totaled $2.7 billion and contracts pending (awarded but unsigned) amounted to $744 million. The sales pipeline at Sep 30, 2020, was $33 billion. This included $2 billion in proposals pending, $1.5 billion in proposals in preparation and $29.6 billion in opportunities tracking.
Operating Performance
Operating income of $84.5 million increased 8.9% year over year. Operating margin of 9.1% increased 690 basis points (bps) year over year. The operating margin fell due to lower revenues from performance-based contracts and a greater mix of lower margin, cost-plus work related to the Census contract.
Balance Sheet and Cash Flow
This Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents balance of $71.7 million compared with $81.5 million in the prior quarter. The company generated $148.5 million of cash from operations. Free cash flow is $136.2 million. MAXIMUS paid out dividends of $17.2 million.
MAXIMUS expects revenues in the range of $3.20-$3.40 billion.
Cash flows from operations are expected between $340 million and $390 million, and free cash flow between $300 million and $350 million.
For fiscal 2021, estimated effective income tax rate is between 25.75% and 26.50%. Weighted average shares outstanding are anticipated in the range of 62.1-62.2 million.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the company’s guidance of $1.30-$1.40.
The Interpublic Group of Companies (IPG - Free Report) reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported solid third-quarter 2020 adjusted EPS of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the company’s guidance of $1.47-$1.55.
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MAXIMUS (MMS) Stock Declines 2.1% Since Q4 Earnings Release
MAXIMUS, Inc. (MMS - Free Report) reported better-than-expected fourth-quarter fiscal 2020 results.
However, the stock has lost 2.1% since the earnings release on Nov 19 as the company posted weak earnings guidance for fiscal 2021. It expects earnings per share (EPS) in the range of $3.45-$3.70, the midpoint ($3.57) of which is lower than the Zacks Consensus Estimate of $3.67.
EPS for the fourth quarter amounted to $1.02, which surpassed the Zacks Consensus Estimate by 12.1% and rose 9.7% year over year. Revenues of $923.8 million beat the consensus mark by 6.6% and increased 22.4% year over year. The uptick was driven by the Census contract in the U.S. Federal Services Segment and new COVID-19 response work to assist governments in supporting individuals and families during the coronavirus pandemic.
Shares of MAXIMUS have lost 3.5% in the year-to-date period against 10.9% growth of the industry it belongs to.
Segmental Revenues
U.S. Services segment (previously named as U.S. Health & Human Services Segment) revenues of $371.3 million increased 23.6% (all organic) year over year, mainly due to new work. This includes work tied to COVID-19 response efforts and the expansion of existing contracts.
U.S. Federal Services segment revenues of $423.2 million surged 35.6% from the year-ago quarter’s reported figure. This segment realized growth from new contracts and new work related to the COVID-19 response efforts.
Outside the U.S. segment revenues of $129.3 million declined 9.2% year over year on a reported basis. This segment has experienced the highest impact of pandemic.
Maximus, Inc. Price, Consensus and EPS Surprise
Maximus, Inc. price-consensus-eps-surprise-chart | Maximus, Inc. Quote
Sales and Pipeline
Year-to-date signed contract awards at Sep 30, 2020 totaled $2.7 billion and contracts pending (awarded but unsigned) amounted to $744 million. The sales pipeline at Sep 30, 2020, was $33 billion. This included $2 billion in proposals pending, $1.5 billion in proposals in preparation and $29.6 billion in opportunities tracking.
Operating Performance
Operating income of $84.5 million increased 8.9% year over year. Operating margin of 9.1% increased 690 basis points (bps) year over year. The operating margin fell due to lower revenues from performance-based contracts and a greater mix of lower margin, cost-plus work related to the Census contract.
Balance Sheet and Cash Flow
This Zacks Rank #4 (Sell) company ended the quarter with cash and cash equivalents balance of $71.7 million compared with $81.5 million in the prior quarter. The company generated $148.5 million of cash from operations. Free cash flow is $136.2 million. MAXIMUS paid out dividends of $17.2 million.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2021 Outlook
MAXIMUS expects revenues in the range of $3.20-$3.40 billion.
Cash flows from operations are expected between $340 million and $390 million, and free cash flow between $300 million and $350 million.
For fiscal 2021, estimated effective income tax rate is between 25.75% and 26.50%. Weighted average shares outstanding are anticipated in the range of 62.1-62.2 million.
Performance of Other Business Services Companies
Equifax (EFX - Free Report) reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the company’s guidance of $1.30-$1.40.
The Interpublic Group of Companies (IPG - Free Report) reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.
IQVIA Holdings (IQV - Free Report) reported solid third-quarter 2020 adjusted EPS of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the company’s guidance of $1.47-$1.55.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>