Investor-Friendly Steps Aid MAXIMUS (MMS), High Debt Ails

Maximus, Inc. MMS shares have appreciated 7.4% in the past year compared with a 1.5% rise of the industry it belongs to. The company is currently benefiting from strong shareholder-friendly measures and strategic acquisitions.

Image Source: Zacks Investment Research

The company reported better-than-expected fourth-quarter fiscal 2021 results. Earnings per share (excluding 25 cents from non-recurring items) amounted to $1.08, which surpassed the Zacks Consensus Estimate by 21.4% and increased 5.9% year over year. Revenues of $1.1 billion beat the consensus mark by 2.1% and increased 19.7% year over year.

How is Maximus Doing?

The company has an impressive track record of dividend payouts. During fiscal 2020 and 2019, MAXIMUS paid out cash dividends of $70.2 million and $63.9 million, respectively. It paid $11.7 million dividends to its shareholders during each of fiscal 2018, 2017 and 2016. These moves reflect MAXIMUS’s commitment to boost shareholders’ value and underline its confidence in the business.

MAXIMUS is active on the acquisition front to expand its business processes, knowledge and client relationships, enhance technical capabilities and gain additional skill sets. Strategic acquisitions also complement the company’s long-term organic growth strategy. On Jun 1, MAXIMUS completed the acquisition of Veterans Evaluation Services. The buyout will create an opportunity for Maximus to grow Veterans Evaluation Services independent clinical assessment business at the Federal level, while expanding its presence in the U.S. Department of Veterans Affairs. On Mar 1, the company completed the purchase of the Federal division of Attain. In 2020, MAXIMUS completed two acquisitions — InjuryNet Australia Pty Limited and Index Root Korea Co. Ltd.

MAXIMUS’ cash and cash equivalent balance of $135 million at the end of fourth-quarter fiscal 2021 was well below the long-term debt level of $1.43 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. Nevertheless, the cash level can meet the short-term debt of $81 million.

Zacks Rank & Stocks to Consider

Maximus currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget CAR, Cross Country Healthcare, Inc. CCRN and CRA International, Inc. CRAI.

Avis Budget has an expected earnings growth rate of around 398.1% for the current year. CAR has a trailing four-quarter earnings surprise of 76.9%, on average.

Avis Budget’s shares have surged 673.8% so far this year. CAR has a long-term earnings growth of 27.5%. CAR sports a Zacks #1 Rank.

Cross Country Healthcare has an expected earnings growth rate of around 397.8% for the current fiscal year. CCRN has a trailing four-quarter earnings surprise of 75%, on average.

Cross Country Healthcare’s shares have surged 236.9% so far this year. CCRN has a long-term earnings growth of 21.5%. CCRN sports a Zacks #1 Rank.

CRA International has an expected earnings growth rate of around 61.2% for the current year. CRA International has a trailing four-quarter earnings surprise of 51%, on average.

CRA International’s shares have surged 135.7% so far this year. CRA International has a long-term earnings growth of 15.5%. FDS carries a Zacks #2 (Buy) Rank.
 

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