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Why Is Maximus (MMS) Up 2.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Maximus (MMS - Free Report) . Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Maximus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Maximus Beats Q3 Earnings Estimates
Maximus reported impressive third-quarter fiscal 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate.
Quarterly adjusted earnings of $1.7 per share beat the Zacks Consensus Estimate by 18.4% and increased more than 100% on a year-over-year basis. Revenues of $1.3 billion beat the consensus mark by 3% and rose 10.6% from the year-ago quarter.
Segmental Revenues
The U.S. Federal Services segment’s revenues of $683.3 million rose 17% from the year-ago reported number and beat our estimate of $644.8 million. The Outside the U.S. segment’s revenues of $159.3 million increased 2.3% from third-quarter fiscal 2023 and outpaced our anticipated $139.5 million. The U.S. Services segment’s revenues of $449.1 million increased 5.2% year over year and missed our estimate of $478.1 million.
Sales & Pipeline
Signed contract awards as of Jun 30 totaled $1.3 billion and contracts pending (awarded but unsigned) amounted to $398 million. The sales pipeline, as of Jun 30, was $44.1 billion. This included $2.9 billion in pending proposals, $7.3 billion in proposals in preparation and $33.8 billion in opportunities tracking. The book-to-bill ratio as of Jun 30, 2024, was 0.6X.
Operating Performance
Adjusted operating income of $165.3 million increased more than 100% from the year-ago quarter. This compares with our estimate of $124.9 million. The adjusted operating income margin of 12.6% increased 570 basis points year over year, surpassing our estimate of 9.9%.
Balance Sheet & Cash Flow
Maximus ended the quarter with a cash and cash equivalents balance of $102.8 million compared with $77.4 million reported at the end of the second quarter of fiscal 2024. The company utilized $199.3 million in cash from operations. Capital expenditure was $34.7 million and the adjusted free cash flow amounted to $164.6 million.
2024 Guidance
For fiscal 2024, the company raised its guidance for revenues to $5.25-$5.35 billion from the $5.15-$5.25 billion provided previously. Maximus raised adjusted earnings to $6.00-$6.20 from the $5.65-$5.85 provided at the end of the preceding quarter. The guidance for the free cash flow was raised to $350-$380 million from the $330-$370 million provided in the previous quarter. Maximus hiked its expectation for interest expenses to $80 million from the preceding quarter’s $77 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Maximus has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Maximus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Maximus is part of the Zacks Government Services industry. Over the past month, ICF International (ICFI - Free Report) , a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended June 2024 more than a month ago.
ICF reported revenues of $512.03 million in the last reported quarter, representing a year-over-year change of +2.4%. EPS of $1.69 for the same period compares with $1.57 a year ago.
ICF is expected to post earnings of $1.81 per share for the current quarter, representing no change from the year-ago quarter. Over the last 30 days, the Zacks Consensus Estimate has changed +1.1%.
ICF has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Why Is Maximus (MMS) Up 2.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Maximus (MMS - Free Report) . Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Maximus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Maximus Beats Q3 Earnings Estimates
Maximus reported impressive third-quarter fiscal 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate.
Quarterly adjusted earnings of $1.7 per share beat the Zacks Consensus Estimate by 18.4% and increased more than 100% on a year-over-year basis. Revenues of $1.3 billion beat the consensus mark by 3% and rose 10.6% from the year-ago quarter.
Segmental Revenues
The U.S. Federal Services segment’s revenues of $683.3 million rose 17% from the year-ago reported number and beat our estimate of $644.8 million. The Outside the U.S. segment’s revenues of $159.3 million increased 2.3% from third-quarter fiscal 2023 and outpaced our anticipated $139.5 million. The U.S. Services segment’s revenues of $449.1 million increased 5.2% year over year and missed our estimate of $478.1 million.
Sales & Pipeline
Signed contract awards as of Jun 30 totaled $1.3 billion and contracts pending (awarded but unsigned) amounted to $398 million. The sales pipeline, as of Jun 30, was $44.1 billion. This included $2.9 billion in pending proposals, $7.3 billion in proposals in preparation and $33.8 billion in opportunities tracking. The book-to-bill ratio as of Jun 30, 2024, was 0.6X.
Operating Performance
Adjusted operating income of $165.3 million increased more than 100% from the year-ago quarter. This compares with our estimate of $124.9 million. The adjusted operating income margin of 12.6% increased 570 basis points year over year, surpassing our estimate of 9.9%.
Balance Sheet & Cash Flow
Maximus ended the quarter with a cash and cash equivalents balance of $102.8 million compared with $77.4 million reported at the end of the second quarter of fiscal 2024. The company utilized $199.3 million in cash from operations. Capital expenditure was $34.7 million and the adjusted free cash flow amounted to $164.6 million.
2024 Guidance
For fiscal 2024, the company raised its guidance for revenues to $5.25-$5.35 billion from the $5.15-$5.25 billion provided previously. Maximus raised adjusted earnings to $6.00-$6.20 from the $5.65-$5.85 provided at the end of the preceding quarter. The guidance for the free cash flow was raised to $350-$380 million from the $330-$370 million provided in the previous quarter. Maximus hiked its expectation for interest expenses to $80 million from the preceding quarter’s $77 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
Currently, Maximus has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Maximus has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Maximus is part of the Zacks Government Services industry. Over the past month, ICF International (ICFI - Free Report) , a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended June 2024 more than a month ago.
ICF reported revenues of $512.03 million in the last reported quarter, representing a year-over-year change of +2.4%. EPS of $1.69 for the same period compares with $1.57 a year ago.
ICF is expected to post earnings of $1.81 per share for the current quarter, representing no change from the year-ago quarter. Over the last 30 days, the Zacks Consensus Estimate has changed +1.1%.
ICF has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.