Maximus (MMS) has been beaten down lately with too much selling pressure. While the stock has lost 8.4% over the past four weeks, there is light at the end of the tunnel as it is now in oversold territory and Wall Street analysts expect the company to report better earnings than they predicted earlier.We use Relative Strength Index (RSI), one of the most commonly used technical indicators, for spotting whether a stock is oversold. This is a momentum oscillator that measures the speed and change of price mov ...

Core Insights - The launch of the AI-enabled Accuracy Assistant by Maximus aims to enhance the accuracy of the Supplemental Nutrition Assistance Program (SNAP) by detecting data inconsistencies and potential issues before benefits are issued [1][9] Financial Performance - Maximus maintains a strong liquidity position with a current ratio of 2.34 at the end of fiscal 2025, surpassing the industry average of 2.07, indicating the company's ability to cover near-term liabilities [2][9] - The company has shown a consistent liquidity track record with current ratios of 2.00 in 2021, 1.43 in 2022, 1.38 in 2023, and 1.54 in 2024 [2] Shareholder Returns - Maximus has a brief history of dividend payments, with cash dividends of $68.8 million, $68.7 million, $68.0 million, and $72.9 million in fiscal years 2021 to 2024, followed by $68.7 million in fiscal 2025 [3] - The company raised its quarterly dividend by 10% to 33 cents per share in January 2026, reflecting confidence in its financial strength and long-term growth prospects [3][9] Investment Potential - Maximus carries a Zacks Rank of 2 (Buy), indicating attractive investment opportunities [4] - The company has a positive earnings surprise history, surpassing the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 25.5% [5] - The Zacks Consensus Estimate for Maximus's fiscal 2027 revenues is projected at $5.65 billion, reflecting a year-over-year growth of 5.6%, with earnings estimated at $8.88 per share, indicating a 5.04% increase [6] Industry Context - The industry to which Maximus belongs has a Zacks Industry Rank of 91 out of 243, placing it in the top 38% of Zacks Industries, which is crucial as a stock's price movement is often related to its industry performance [7]

Core Viewpoint - Maximus (MMS) has shown a downtrend recently, losing 5.3% over the past week, but a hammer chart pattern suggests a potential trend reversal as buying interest may be emerging to counteract selling pressure [1][2]. Technical Analysis - The hammer chart pattern indicates a possible bottoming out, with reduced selling pressure, suggesting that bulls may be gaining control [2][5]. - A hammer pattern forms when there is a small candle body with a long lower wick, indicating that the stock opened lower, made a new low, but closed near or above the opening price, reflecting buying interest [4][5]. - This pattern is significant when it occurs at the bottom of a downtrend, signaling a potential trend reversal as bears may have lost control [5]. Fundamental Analysis - There is a strong consensus among Wall Street analysts to raise earnings estimates for Maximus, which supports the bullish case for the stock [2][7]. - Over the last 30 days, the consensus EPS estimate for the current year has increased by 0.4%, indicating that analysts expect better earnings than previously predicted [8]. - Maximus currently holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [9][10]. Conclusion - The combination of the hammer chart pattern and positive earnings estimate revisions enhances the likelihood of a trend reversal for Maximus, making it a stock to watch for potential investment opportunities [1][7][10].

Core Viewpoint - Maximus (MMS) has experienced significant selling pressure, resulting in a 22.6% decline in stock price over the past four weeks, but analysts anticipate improved earnings in the near future [1] Group 1: Technical Analysis - The Relative Strength Index (RSI) indicates that MMS is currently in oversold territory with a reading of 20.85, suggesting a potential trend reversal is imminent [5] - RSI is a momentum oscillator that helps identify whether a stock is overbought or oversold, with readings below 30 typically indicating oversold conditions [2][3] Group 2: Fundamental Indicators - Analysts have raised their earnings estimates for MMS by 2.8% over the last 30 days, reflecting a strong consensus among sell-side analysts, which often leads to price appreciation [7] - MMS holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, indicating a strong potential for a turnaround [8]

Core Insights - Maximus (MMS) reported mixed first-quarter fiscal 2026 results, with earnings per share of $1.85 beating the Zacks Consensus Estimate by 0.5% and increasing 14.9% year over year, while total revenues of $1.4 billion missed the consensus mark by 4.6% and declined 4.1% from the previous year [1][7] Segmental Revenues - The U.S. Federal Services segment generated revenues of $786.6 million, exceeding the estimate of $775.2 million and showing growth from the previous year [2] - Revenues from the Outside the U.S. segment decreased by 15.7% year over year to $143.2 million, missing the estimate of $162.1 million [2] - The U.S. Services segment reported revenues of $415.2 million, down 8.2% year over year and below the estimate of $470.8 million [2] - The book-to-bill ratio for the quarter was 0.2 [2] Sales and Pipeline - Year-to-date signed contract awards totaled $246 million as of December 31, 2025, while contracts pending amounted to $699 million, impacted by the U.S. federal government shutdown [3] - The sales pipeline stands at $59.1 billion, which includes $3.82 billion in pending proposals, $2.36 billion in proposals in preparation, and $52.9 billion in tracking opportunities [3] Operating Performance - Operating income reached $146.2 million, a 68.5% increase year over year, surpassing the estimate of $136.8 million [4] - The operating income margin improved to 10.9%, up 470 basis points year over year and above the expected 9.7% [4] Key Balance Sheet and Cash Flow Figures - At the end of the quarter, cash and cash equivalents were $137.6 million, down from $222.4 million in the prior quarter [5] - Long-term debt increased to $1.5 billion from $1.3 billion at the end of September [5] - The company utilized $244.4 million in cash for operations, with capital expenditures of $6.2 million during the quarter [5] Fiscal 2026 Guidance - For fiscal 2026, total revenues are expected to be between $5.20 billion and $5.35 billion, below the Zacks Consensus Estimate of $5.45 billion [6] - Adjusted earnings are anticipated in the range of $8.05 to $8.35 per share, with the midpoint of $8.20 exceeding the current consensus estimate of $8.19 [6] - The adjusted EBITDA margin is now expected to be approximately 14%, an increase from the previously guided range of 13.6%–13.7% [8] - Free cash flow is projected to be between $450 million and $500 million, with interest expenses estimated at approximately $75 million [8]

Revenue Performance - Revenue for the three months ended December 31, 2025, was $1,345,046, a decrease of 4.1% compared to $1,402,675 for the same period in 2024[94] - The U.S. Federal Services Segment reported revenue of $786,601, a slight increase of 0.8% from $780,655 in the previous year, with a gross profit margin of 27.3%[103] - The U.S. Services Segment experienced a revenue decline of 8.2% to $415,248, with a gross profit margin of 20.3%[108] - The Outside the U.S. Segment's revenue decreased by 15.7% to $143,197, with a significant drop in gross profit margin to 13.5%[113] - Revenue for the three months ended December 31, 2025, was $143.2 million, a decrease of 15.7% from $169.8 million in the same period of 2024[116] Profitability Metrics - Gross profit increased to $318,670, representing a gross profit margin of 23.7%, up from 21.5% in the prior year[94] - Operating income for the three months ended December 31, 2025, was $146,210, with an operating margin of 10.9%, compared to $86,787 and 6.2% in the same period of 2024[94] - Net income for the three months ended December 31, 2025, was $93,943, significantly higher than $41,196 in the prior year[94] - Gross profit decreased to $19.3 million, representing a gross profit percentage of 13.5%, down from 19.6% in the prior year[116] - Operating loss for the quarter was $1.4 million, compared to an operating income of $8.1 million in the same quarter of the previous year, reflecting a significant decline in operating margin percentage from 4.8% to (1.0)%[116] Cash Flow and Liquidity - Net cash used in operating activities was $244.4 million for the first three months of fiscal year 2026, compared to $80.0 million for the same period in fiscal year 2025[122] - Net cash provided by financing activities was $156.9 million for the first three months of fiscal year 2026, a significant increase from net cash used of $8.3 million in the same period of 2025[126] - The company had $137.6 million in cash and cash equivalents as of December 31, 2025, with access to a $750 million revolving credit facility[117] - Free cash flow for the three months ended December 31, 2025, was $(250.7) million, compared to $(103.0) million for the same period in 2024[137] Earnings Per Share - Diluted earnings per share for Q4 2025 were $1.70, compared to $0.69 in Q4 2024, reflecting a growth of 146.4%[144] - Adjusted diluted earnings per share, excluding amortization of intangible assets and divestiture-related adjustments, was $1.85 for Q4 2025, up from $1.61 in Q4 2024[144] Tax and Expenses - The effective tax rate for the three months ended December 31, 2025, was 25.6%, down from 40.3% in the previous year[101] - SG&A expenses for the three months ended December 31, 2025, included a $9.0 million gain from the divestiture of the child support business[97] Operational Efficiency - Days Sales Outstanding (DSO) increased to 78 days as of December 31, 2025, up from 62 days at September 30, 2025, indicating slower cash collections[123] - Days Sales Outstanding (DSO) is calculated to evaluate the efficiency in converting revenue into cash receipts, with revenue per day determined by dividing total revenue by 91 days[144] Financial Ratios and Leverage - The company reported a Consolidated Net Total Leverage Ratio of 1.79 as of December 31, 2025, which is below the maximum allowable ratio of 4.00:1.00[135] - Consolidated EBITDA for the three months ended December 31, 2025, was $183.8 million, compared to $804.2 million for the trailing twelve months[133] - Adjusted EBITDA for Q4 2025 reached $170,414,000, compared to $156,618,000 in Q4 2024, with an adjusted EBITDA margin of 12.7%, up from 11.2%[144] Financial Risks - The company is exposed to financial risks such as interest rate changes and foreign currency exchange rates, and uses derivative instruments to manage selected interest rate exposures[146] - The reconciliation of cash flows from operations to free cash flow is provided in the "Liquidity and Capital Resources" section of the financial statements[144] - The company regularly refreshes its fixed assets and technology to sustain cash flows from operations[144]

Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $1.35 billion, representing a 4.1% decline compared to the prior year period, with approximately 1.5% of this decline attributed to the divestiture of the outside the U.S. segment [22][24] - Adjusted EBITDA margin was 12.7% and adjusted EPS was $1.85 for the quarter, compared to 11.2% and $1.61, respectively, for the prior year period [23] - The company raised earnings guidance and narrowed revenue guidance for the full fiscal year 2026 [4][32] Business Line Data and Key Metrics Changes - Revenue for the U.S. Federal Services segment increased by 0.8% to $787 million, all growth being organic, with an operating income margin of 16.5% [24] - The U.S. Services segment revenue decreased to $415 million from $452 million, with an operating income margin of 7.1% compared to 9.0% in the prior year period [25] - The outside the U.S. segment revenue decreased to $143 million from $170 million, with an operating loss of $1.4 million compared to an operating profit of $8.1 million in the prior period [28] Market Data and Key Metrics Changes - The company reported a pipeline of sales opportunities totaling $59.1 billion, up from $51.3 billion reported at the end of the previous quarter [8] - The share of new work in the total pipeline is 59%, with the U.S. Federal Services segment's share at 61% [8] - Proposals pending or submitted, and proposals currently being prepared total a combined $6.2 billion, a 55% increase from the previous year [9] Company Strategy and Development Direction - The company is focusing on expanding its use of automation and AI to enhance service delivery and improve financial performance [5][16] - The strategic evolution includes becoming a trusted provider of technology-driven solutions to government customers, with a focus on Medicaid and SNAP programs [5][12] - The company anticipates that award activity will pick up across the remaining quarters of fiscal year 2026, with a focus on organic growth opportunities [8][34] Management's Comments on Operating Environment and Future Outlook - Management noted that the company operates in a resilient sector of government spending, largely unaffected by temporary shutdowns [4] - The company expects to see increased demand for tech-enabled services as states prepare for new Medicaid and SNAP requirements [34] - Management expressed confidence in the guidance for fiscal year 2026, highlighting the durability of essential services provided to government [34] Other Important Information - The company completed the divestiture of its child support business, which comprised approximately $25 million of annual revenue, recognizing a gain of approximately $9 million [21] - The company was selected as the single awardee of the U.S. General Services Administration Blanket Purchase Agreement for government experience contact center services [19] Q&A Session Summary Question: How much of the revenue guidance is in hand versus new work? - Management indicated that there is virtually no new work remaining in the forecast, with initial guidance having about 3% of not yet new work [37] Question: Can you provide more color on segment revenue guidance and potential drivers? - Management expressed confidence in the guidance range, noting that U.S. Services revenue was down more than expected but anticipates year-over-year comparisons to improve [39] Question: What is the receptivity towards the new SNAP offering? - Management reported positive receptivity to the Accuracy Assistant tool, which helps states reduce SNAP payment error rates [48] Question: Any updates on the VA contract timing? - Management confirmed that current contracts have a performance period through December 31, 2026, and they are confident in their performance under the current contract [56] Question: What are the drivers for lower volumes in U.S. Services? - Management noted that there was no single driver for the revenue change, and the lower volumes are expected to improve as the year progresses [68]

Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $1.35 billion, representing a 4.1% decline compared to the prior year period, primarily due to the divestiture of the child support business and organic movements [22][24] - Adjusted EBITDA margin was 12.7% and adjusted EPS was $1.85, compared to 11.2% and $1.61 for the prior year period, indicating a year-over-year improvement driven by the performance of the U.S. Federal Services segment [23][24] - The company raised earnings guidance and narrowed revenue guidance for the full fiscal year 2026, with the bottom end of the revised revenue guidance set at $5.2 billion and the top end at $5.35 billion [31][32] Business Line Data and Key Metrics Changes - Revenue for the U.S. Federal Services segment increased by 0.8% to $787 million, all growth being organic, with an operating income margin of 16.5% [24][25] - The U.S. Services segment revenue decreased to $415 million from $452 million, with an operating income margin of 7.1%, reflecting lower volumes and demand for engagement [25][26] - The outside the U.S. segment revenue decreased to $143 million, with an operating loss of $1.4 million, primarily due to the divestiture of Australian and South Korean businesses [27][28] Market Data and Key Metrics Changes - The company reported a pipeline of sales opportunities totaling $59.1 billion, up from $51.3 billion, with a significant portion related to Medicaid and SNAP opportunities [8][9] - The share of new work in the total pipeline is 59%, with the U.S. Federal Services segment accounting for 61% of the total pipeline [8] Company Strategy and Development Direction - The company is focusing on expanding its use of automation and AI to enhance service delivery and improve financial performance, which is expected to drive shareholder value [5][16] - The strategic evolution includes becoming a trusted provider of technology-driven solutions to government customers, with a focus on Medicaid and SNAP programs [4][5] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown had minimal direct impact on the contract portfolio, but there were slower payments from customers and delays in award decisions [5][29] - The company anticipates that award activity will pick up in the remaining quarters of fiscal year 2026, with a focus on organic growth potential in fiscal year 2027 and beyond [8][34] Other Important Information - The company completed the divestiture of its child support business, which generated approximately $25 million in annual revenue, to focus on higher-value services [21] - Maximus was recognized on Forbes' list of America's Best Employers for 2026, highlighting employee contributions to customer trust [20] Q&A Session Questions and Answers Question: How much of the revenue guidance is in hand versus new work? - Management indicated that there is virtually no new work remaining in the forecast, with initial guidance having about 3% of not yet new work [37] Question: Can you provide more color on the segment revenue guidance? - Management expressed confidence in the guidance range, noting that U.S. Services revenue was down more than expected but anticipates year-over-year organic growth to resume by Q4 [39] Question: What is the receptivity towards the new SNAP offering? - Management reported positive receptivity to the Accuracy Assistant tool, which helps states reduce SNAP payment error rates [48] Question: What are the drivers for lower volumes in U.S. Services? - Management noted that lower volumes were driven by several programs experiencing reduced demand, but they expect year-over-year comparisons to improve [68][76]

Financial Data and Key Metrics Changes - For the first quarter of fiscal year 2026, the company reported revenue of $1.35 billion, representing a 4.1% decline compared to the prior year period, with approximately 1.5% of this decline attributed to the divestiture of the outside the U.S. segment [22][23] - Adjusted EBITDA margin was 12.7% and adjusted EPS was $1.85 for the quarter, compared to 11.2% and $1.61, respectively, for the prior year period [23] - Cash used in operating activities was a net outflow of $244 million, and Free Cash Flow was a net outflow of $251 million for the quarter, reflecting expected seasonality and temporary delays in collections [29][30] Business Line Data and Key Metrics Changes - Revenue for the U.S. Federal Services segment increased by 0.8% to $787 million, all growth being organic, with an operating income margin of 16.5% [24] - The U.S. Services segment revenue decreased to $415 million from $452 million, with an operating income margin of 7.1%, down from 9.0% in the prior year period [25] - The outside the U.S. segment revenue decreased to $143 million from $170 million, with an operating loss of $1.4 million compared to an operating profit of $8.1 million in the prior period [27] Market Data and Key Metrics Changes - The company reported a pipeline of sales opportunities totaling $59.1 billion, up from $51.3 billion reported at the end of the previous quarter, with 59% of the pipeline being new work [7][8] - Signed awards totaled $246 million in the first quarter, with a Book-to-Bill Ratio of approximately 0.5x, impacted by light award activity [6] Company Strategy and Development Direction - The company is focusing on expanding its use of automation and AI to enhance service delivery and improve financial performance, aiming to drive shareholder value [5][16] - The strategic evolution includes becoming a trusted provider of technology-driven solutions to government customers, with a focus on Medicaid and SNAP programs [4][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the government shutdown had a minimal direct impact on the contract portfolio, but there were slower payments from customers and delays in award decisions [5] - The company anticipates that award activity will pick up in the remaining quarters of fiscal year 2026, with guidance reflecting improvement in earnings outlook and narrowing revenue guidance [21][32] Other Important Information - The company completed the divestiture of its child support business, which comprised approximately $25 million of annual revenue, recognizing a gain of approximately $9 million [21] - The company was selected as the single awardee of the U.S. General Services Administration Blanket Purchase Agreement for government experience contact center services [19] Q&A Session Summary Question: How much of the revenue guidance is in hand versus new work? - Management indicated that there is virtually no new work remaining in the forecast, with initial guidance having about 3% of not yet new work [37] Question: Can you provide more color on the segment revenue guidance? - Management expressed confidence in the guidance range, noting that U.S. Services revenue was down more than expected but anticipated improvement in year-over-year comparisons [39] Question: What are the types of programs that could be awarded under the GSA blanket award? - Management explained that the underlying platform includes a multi-channel contact center environment, with capabilities for intelligent document processing and analytics [42][46] Question: What has been the receptivity towards the new SNAP offering? - Management reported positive receptivity to the Accuracy Assistant tool, which helps states reduce SNAP payment error rates [48][49] Question: What are the drivers for lower volumes in U.S. Services? - Management noted that there was no single driver for the revenue change, with several programs experiencing lower volumes, but expected organic growth to resume by Q4 [68][80]

Fiscal 2026 First Quarter Earnings Call Bruce Caswell President & Chief Executive Officer February 5, 2026 1 | Maximus: Q1 FY26 Earnings Presentation Forward-looking Statements & Non-GAAP Information These slides should be read in conjunction with our most recent quarterly earnings press release, along with listening to or reading a transcript of management comments from our most recent quarterly earnings conference call. This document contains non-GAAP financial information. Management uses this informatio ...