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Here's Why You Should Hold MAXIMUS (MMS) in Your Portfolio

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MAXIMUS, Inc. (MMS - Free Report) has an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth. The company’s earnings for fiscal 2021 are expected to improve 7.9% year over year and earnings for fiscal 2022 are expected to grow at a rate of 20.3%.

The stock has gained 47.1% in the past year, compared with the industry's rally of 32.8%.

Key Growth Drivers

MAXIMUS has a diversified portfolio with rising operating profit margin, high cash conversion and access to a $400 million credit facility. The company’s financial flexibility enables it to pursue business investment and strategic acquisition opportunities as well as reward shareholders through dividends.

The company’s cash and cash equivalent balance of $132.6 million at the end of first-quarter fiscal 2021 was well above the debt level $18.5 million, underscoring the fact that the company has enough cash to meet its debt burden. A strong cash position allows the company to pursue strategic acquisitions, invest in growth initiatives and return cash through regular quarterly dividend payment and share repurchases.

Risks Associated

MAXIMUS’ global presence makes it vulnerable to the risks associated with foreign currency exchange rate fluctuations. Outside the United States, the company transacts in currencies like the Australian Dollar, the British Pound, the Canadian Dollar, the Saudi Arabian Riyal and the Singapore Dollar and the British Pound.

Zacks Rank and Stocks to Consider

MAXIMUS currently carries a Zacks Rank #3 (Hold).

Some better-ranked service stocks are The Interpublic Group of Companies, Inc. (IPG - Free Report) , Gartner, Inc. (IT - Free Report) and TeleTech Holdings (TTEC - Free Report) . The Interpublic Group of Companies and Gartner carry a Zacks Rank #2 (Buy), while TeleTech sports a Zacks #1 Rank (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected earnings per share (three to five years) growth rate for The Interpublic Group of Companies, Gartner and TeleTech is pegged at 2.4%, 13.5% and 14.7%, respectively.

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