Maximus, Inc. MMS is benefiting from a robust relationship with governments, enabling it to secure long-term contracts. Buyouts expand its business processes and strengthen its client base. Dividend-seeking investors will find this stock appealing. Robust liquidity reassures the company’s financial position.

MMS reported better-than-expected first-quarter fiscal 2025 results. Quarterly adjusted earnings of $1.61 per share beat the Zacks Consensus Estimate by 15.8% and increased 20.2% on a year-over-year basis. Revenues of $1.4 billion topped the consensus mark by 7% and rose 5.7% from the year-ago quarter.

How is Maximus Faring?

The company maintains strong relationships with governments, and the long-term contracts provided by the government create a predictable recurring revenue stream. MMS seeks long-term relationships with clients in both existing and adjacent markets.

Maximus also concentrates on expanding its foothold in clinical services, as well as long-term services and support. Longevity and complex health issues have increased the need for government social benefits and safety-net programs. We believe that this should continue driving demand for the company’s services.

Acquisitions enable MMS 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. In 2024, the company acquired part of a vendor who had performed IT services for Maximus over several years for $18 million in cash. The 2022 acquisition of Stirling Institute of Australia has strengthened its employment services. BZ Bodies' buyout has strengthened MMS’s services in the U.K.

Maximus banks on the subject matter expertise of its workforce in the critical aspects of the design, implementation, and operation of government health and human services programs. Its ability to deliver defined, measurable outcomes differentiates MMS.

The company generates a strong cash flow from operations due to its profitable business and efficient receivables management. In case of an urgent requirement for working capital, MMS can borrow $600 million via a credit agreement with JPMorgan Chase N.A.  All these factors provide the company with a competitive edge over its peers.

In fiscal 2021, 2022, 2023 and 2024, Maximus paid out cash dividends of $68.8 million, $68.7 million, $68 million and $72.9 million, respectively. These steady payouts indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.

MMS’s current ratio (a measure of liquidity) at the end of first-quarter fiscal 2025 was pegged at 1.72, higher than the industry’s 1.54. A current ratio of more than 1 indicates that the company should not have problems meeting its short-term obligations.

Image Source: Zacks Investment Research

Zacks Rank & Other Stocks to Consider

MMS currently flaunts a Zacks Rank #1 (Strong Buy) at present.

Some other top-ranked stocks in the broader Zacks Business Services sector are AppLovin APP and Climb Global Solutions, Inc. CLMB.

AppLovin sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

APP has a long-term earnings growth expectation of 20%. It delivered a trailing four-quarter earnings surprise of 23.5%, on average.

Climb Global Solutions flaunts a Zacks Rank of 1 at present.

CLMB has a long-term earnings growth expectation of 12%. It delivered a trailing four-quarter earnings surprise of 59.3%, on average.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Maximus, Inc. (MMS) : Free Stock Analysis Report

AppLovin Corporation (APP) : Free Stock Analysis Report

Climb Global Solutions, Inc. (CLMB) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research