The past six months haven’t been great for Maximus. It just made a new 52-week low of $55.08, and shareholders have lost 36.6% of their capital. This might have investors contemplating their next move.
Following the drawdown, is now the time to buy MMS? Find out in our full research report, it’s free.
Why Does Maximus Spark Debate?
With nearly 50 years of experience translating public policy into operational programs that serve millions of citizens, Maximus (NYSE: MMS) provides operational services, clinical assessments, and technology solutions to government agencies in the U.S. and internationally.
Two Positive Attributes:
1. Outstanding Long-Term EPS Growth
Analyzing the long-term change in earnings per share (EPS) shows whether a company’s incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
Maximus’s EPS grew at 11.9% compounded annual growth rate over the last five years, higher than its 7.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
2. New Investments Bear Fruit as ROIC Jumps
We like to invest in businesses with high returns, but the trend in a company’s ROIC can also be an early indicator of future business quality.
On average, Maximus’s ROIC increased by 3.8 percentage points annually each year over the last few years. This is a great sign when paired with its already strong returns. It could suggest its competitive advantage or profitable growth opportunities are expanding.
One Reason to Be Careful:
Lackluster Revenue Growth
Long-term growth is the most important, but within business services, a stretched historical view may miss new innovations or demand cycles. Maximus’s recent performance shows its demand has slowed as its annualized revenue growth of 1.9% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs. 
Final Judgment
Maximus has huge potential even though it has some open questions. After the recent drawdown, the stock trades at 6.3× forward P/E (or $55.08 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free.
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