Maximus, Inc. (MMS): what the price assumes
boothcheck covers Maximus, Inc. (MMS) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-27.
Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/MMS
Headline
| Field | Value |
|---|---|
| Ticker | MMS |
| Company | Maximus, Inc. |
| Current price | $59.75/sh |
| Composition | Program Operations 49% / Clinical Services 39% / Employment & Other 7% / Technology Solutions 6% |
What The Price Assumes (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin (value-band context) | 4.8% |
| Operating margin today | 11.0% |
| Margin compression (value-band) | -6.2pp |
| Multiple paid | 8x operating income |
The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 5.7% sits below it).
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -1.03σ |
| cohort percentile (of 212 peers) | 10 |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.78x | 5 | justifies |
| Earnings | 0.82x | 5 | justifies |
| Relative | 0.25x | 2 | justifies |
| Growth | 0.70x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.3%); the inversion above states its own rate.
Per-Model Detail (n=15)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $104.20 | 0.57x | yes | FCF base $0.4B, growth -3% (input: historical growth), terminal g 0.5%, WACC 6.3%, 5yr projection |
| DCF Exit Multiple | Growth | $85.86 | 0.70x | yes | Exit EV/EBITDA: 5.8x / 7.8x / 9.8x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | — | — | no | P/E 15.37x (blended: static sector reference 20x + trailing (TTM) 8x), scenarios: 13.1x / 15.4x / 17.7x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $76.58 | 0.78x | yes | BV/sh $33.24, ROE (TTM) 21.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $115.37 | 0.52x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $38.07 | 1.57x | yes | Rev $5.2B, growth -3% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $235.20 | 0.25x | yes | EPS $6.72, growth 35% (input: historical EPS growth), PEG=0.24 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $73.70 | 0.81x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.43B × (1−25%) / WACC 6.3% → EPV (no growth) |
| Residual Income | Asset | $109.46 | 0.55x | yes | BV $33.24 + 5yr PV of (ROE (TTM) 21.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $70.90 | 0.84x | yes | √(22.5 × EPS $6.72 × BVPS $33.24) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | EBITDA $0.62B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $57.46 | 1.04x | yes | FCF $433.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $50.21 | 1.19x | yes | SBC-adj FCF $0.40B (FCF $0.43B − SBC $0.04B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $216.83 | 0.28x | yes | EPS $6.72 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $18.63 | 3.21x | yes | BV $33.24 × (ROIC 3.5% / WACC 6.3%) |
| P/Sales Sector | Relative | — | — | no | Revenue $5.25B × sector P/S 1.5x |
| PEG Fair Value | Relative | $252.00 | 0.24x | yes | EPS $6.72 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $72.65 | 0.82x | yes | EPS $6.72 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Economic-Unit Decomposition (Sum Of The Parts)
One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.
| Unit | Role | Valuation basis | Revenue | Reported profit | Value evidence | Status |
|---|---|---|---|---|---|---|
| U.S. Federal Services | operating | enterprise | $3.1b | $0 operating-income | withheld | unresolved no unit value |
| U.S. Services | operating | enterprise | $1.8b | $0 operating-income | withheld | unresolved no unit value |
| Outside the U.S. | operating | enterprise | $599.9m | $0 operating-income | withheld | unresolved no unit value |
No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.
Solvency
| Field | Value |
|---|---|
| Net debt | $1.6b |
| Net debt / NOPAT (after-tax) | 3.64x |
| Net debt / operating income (pre-tax) | 2.73x |
| Interest coverage | 6.5x |
| Share count CAGR (buyback) | -3.7% |
| Burning cash | no |
Bullet Takeaways
- Maximus runs health and human-services programs for governments, from Medicaid and Medicare enrollment to clinical assessments, delivered through "digitally enabled contact centers, mail-room operations, and mobile or web-based platforms," a recurring-contract business that earns a 22% return on equity.
- The stock is unusually cheap on every lens: at about seven times operating income the price sits below what even a steady decline in operating profit would warrant, while the company earns an 11% operating margin and trades below most measures of its worth.
- The biggest risk is the customer: Maximus depends on government contracts that, in its own words, allow the agency "to terminate the contract fully or partially without notice," so a shift in federal funding or priorities hits the top line directly.
Bull Case
The capital-allocation story is where the bull case starts, because it tells you what management thinks the stock is worth. Maximus has been shrinking its share count by more than 3% a year, pays a dividend yielding above 2%, and just authorized a $400 million repurchase program on top of that. A company buying back this much of itself at roughly seven times operating income is making a clear statement: management believes its own equity is the best available use of cash. When the buyback is funded by real free cash flow rather than debt, every repurchased share leaves the remaining owners with a bigger slice of a steady, cash-generating business.
The business itself is more durable than its low multiple suggests. Maximus administers large government programs, and the work is sticky: it delivers services through "digitally enabled contact centers, mail-room operations, and mobile or web-based platforms," embedded in multi-year contracts for which clients "award points for past performance tied to program outcomes." That past-performance scoring is a quiet moat. An incumbent with a clean track record running a state's Medicaid enrollment is hard to dislodge, because switching providers on a live citizen-facing program is risky for the government client. Maximus earns a 22% return on equity from this base, which is a high return for a services company.
The valuation cushion is the third leg, and it is substantial. Every family of valuation method, asset value, earnings power, peer multiples, and forward growth, lands above the current price. The company recently raised its full-year guidance, lifting adjusted EPS to a range of $8.25 to $8.55 and nudging its margin target higher, evidence the operating business is executing even as revenue is flattish. A stock trading below where multiple independent methods value it, generating a 22% return on equity, returning capital aggressively, and raising guidance, is the classic shape of a value name where the market is pricing in more deterioration than the numbers show. The bull case does not need growth. It needs the contracts to hold while the buyback compounds the per-share value.
Bear Case
The moat the bull leans on, incumbency in government programs, is the same thing that can erode fastest when the government changes its mind. Maximus does not own its customers; it rents them one appropriation cycle at a time. The 10-K is blunt about the terms: government agencies "do not have to exercise these option periods, and they may elect not to exercise them for budgetary, performance, or any other reason," and the contracts "typically contain provisions permitting a government customer to terminate the contract fully or partially without notice." That is not a hypothetical risk. It is the structural reality of a business whose entire revenue base is at the discretion of public budgets and shifting political priorities.
The growth picture already shows the strain. Revenue in the most recent quarter was $1.31 billion, down from $1.36 billion a year earlier, and full-year revenue is guided to be roughly flat to slightly down. The cheapness is partly a verdict, not just an opportunity: the market is pricing a business whose core segments are no longer growing and whose largest customer, the federal government, is in a cost-scrutiny posture. The 10-K flags that "changes to procurement rules may result in additional competition, scrutiny and costs of compliance" and that "changes in federal regulations may require us to change our existing business practices." When the buyer is tightening its belt, a vendor concentrated in that buyer feels it directly.
The financial frame caps the margin for error. Net debt of about $1.4 billion sits at roughly two and a half times operating income, with interest coverage above six times, which is comfortable but means a chunk of cash flow services debt rather than compounds for shareholders. The aggressive buyback is attractive while the contracts hold, but it also reduces the equity cushion if a major contract is cut or a program is restructured. The bear case is that Maximus is cheap for a reason: a flat-to-declining top line, near-total dependence on government funding that can be withdrawn without notice, and a regulatory environment leaning toward cost cuts. A high return on equity does not protect a business whose revenue can be legislated away.
Valuation
The price is making a pessimistic bet. At $55.71 (June 27, 2026) the market pays about seven times trailing operating income, a multiple so low that the price sits below what even a 5% annual decline in operating profit would warrant. In plain terms, the market is pricing Maximus as a business in gentle, permanent contraction. That is the bar the company has to clear, and it is a low one: anything better than slow decline is upside the price is not paying for.
What makes this name unusual is that no valuation family disagrees. Asset value, earnings power, peer multiples, and the forward-growth method all land above the current price. When every method points the same way and the stock trades below all of them, one of two things is true: either the market sees a risk the methods do not capture, or the stock is genuinely mispriced. For Maximus, the uncaptured risk is concrete and namable, the government-funding dependence, which is why the discount exists rather than being a free lunch.
Solvency is sound and supports the value case rather than threatening it. Net debt of about $1.4 billion is roughly two and a half times trailing operating income, interest coverage runs above six times, and the company generates real free cash flow, enough to fund a dividend, a $400 million buyback, and debt service at once. The share count is falling more than 3% a year, so the per-share value compounds even on flat earnings. The decisive question for the valuation is not whether Maximus can survive, it plainly can, but whether the revenue base holds. If the contracts renew and the core stabilizes, a 22% return on equity bought below book-supported value is a genuine bargain. If federal cost-cutting carves into the program base, the cheap multiple is the market correctly pricing a shrinking annuity. The whole thesis turns on the durability of government demand, not on the balance sheet.
Catalysts
Maximus raised its outlook with its fiscal second-quarter 2026 results, reported for the period ended March 31. Revenue of $1.31 billion came in below the prior year's $1.36 billion, but diluted EPS rose to $1.80 and adjusted EPS to $2.07, and the company lifted full-year adjusted EPS guidance by $0.20 to a range of $8.25 to $8.55 while raising its adjusted EBITDA margin target to about 14.2%. Alongside the raise, Maximus authorized a $400 million share repurchase program, the clearest signal of management's confidence in the cash flow and its view of the stock's value.
The forward picture is a tug-of-war between margin execution and top-line pressure. The catalysts on the positive side are continued margin expansion, the pace of the new buyback, and new contract awards or rebids that the company wins on its past-performance record. The risk on the other side is federal: with revenue dependent on government appropriations and a cost-scrutiny environment around federal spending, the single most important variable is whether the program base stabilizes or contracts. Contract renewals, option-period exercises, and any changes to Medicaid and Medicare program administration are the events that move the thesis most, because they determine whether the cheap multiple is an opportunity or a fair price for a shrinking base.
Peer Cohorts (Per Segment, With Filing Citations)
U.S. Federal Services (reported)
- BAH (BOOZ ALLEN HAMILTON HOLDING CORPORATION)
- FY2025 10-K: …• claim rights in solutions, systems, and technology produced by us, appropriate such work-product for their continued use without continuing to contract for our services and disclose such work-product to third parties, including other U.S. government agencies and our competitors, which could harm our competitive…
- FY2025 10-K: …and our ability to assimilate and deploy new customer staff against funded backlog; cost-cutting initiatives and other efforts to reduce U.S. government spending, which could reduce or delay funding for orders for services; and delayed funding of our contracts due to delays in the completion of the U.S. government's…
- LDOS (Leidos Holdings, Inc.)
- FY2025 10-K: …to be entitled to, based on the assessment of the contract specific variable fee criteria, complexity of work and related risks, extent of customer discretion, amount of variable consideration received historically and the potential of significant reversal of revenue. Contracts with the U.S. government are subject to…
- FY2025 10-K: …across these reportable segments. NATIONAL SECURITY & DIGITAL Our National Security & Digital business provides leading-edge and technologically advanced services, solutions and products across substantially all U.S. federal government customers. Our advanced capabilities allow us to provide technology-enabled…
- SAIC (Science Applications International Corporation)
- FY2025 10-K: …unfunded ceiling amounts that enable, but not commit, the U.S. government to purchase substantial amounts of services or solutions from one or more contractors. At the time an IDIQ contract is awarded (prior to the issuance of any task orders), a contractor may have limited or no visibility as to the ultimate amount…
- FY2025 10-K: …the U.S. government or to subcontracts with other contractors engaged in work for the U.S. government. In fiscal 2025 and fiscal 2024, approximately 52% of our total revenues were attributable to the "Department of Defense", while 46% were attributable to "Intelligence and other federal government agencies" and the…
- CACI (CACI International Inc)
- FY2025 10-K: …and speed of delivery. We believe that our customers' use of lowest price/technically acceptable (LPTA) procurements, which contributed to pricing pressures in past years, has moderated, though price still remains an important factor in procurements. We also continue to see protests of major contract awards and…
- FY2025 10-K: …could result in our inability to compete directly for prime contracts. Our federal government contracts may be terminated by the government at any time and may contain other provisions permitting the government not to continue with contract performance, and if lost contracts are not replaced, our operating results…
- PSN (Parsons Corporation)
- FY2025 10-K: …with customers whereby the Company provides planning, design, engineering, technical, and construction and program management services. The Company has contracts with the United States federal government that contain provisions requiring compliance with the United States Federal Acquisition Regulation ("FAR") and the…
- FY2025 10-K: …before interest, taxes, depreciation and amortization (EBITDA) contribution of 46% and 54%, respectively, for the year ended December 31, 2025 ("fiscal 2025"). See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Segment Results" for further discussion on our segments. Federal…
- ACN (Accenture plc)
- FY2025 10-K: …and industry organizations and associations Human and social services agencies; defense departments and military forces; public safety authorities, including justice departments; educational institutions; non-profit organizations; cities; transportation agencies; and postal, customs, revenue and tax agencies Our work…
- FY2025 10-K: …Department of Government Efficiency. We are seeing impacts from these efforts in our federal government business ("Accenture Federal Services, or AFS"), including delays in new procurements, reductions in price and contract scope, and contract terminations. These changes have had an adverse effect on AFS's results…
U.S. Services (reported)
- EXLS (EXLSERVICE HOLDINGS, INC.)
- FY2025 10-K: 22, by and among the Company and the other loan parties thereto, the lenders party thereto, and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. 1-33089) filed on April 20, 2022). 10.23 First Amendment to Amended and Restated…
- FY2025 10-K: …2025, the FASB issued ASU No. 2025-10, Government Grants ("ASC Topic 832"): Accounting for Government Grants Received by Business Entities. This ASU provides authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants for business entities, creating a framework that…
- CNXC (CONCENTRIX CORPORATION)
- FY2025 10-K: …are delivered to clients for an amount that reflects the consideration to which the Company is entitled in exchange for those services. The Company recognizes revenue over time as the client simultaneously receives and consumes the benefits provided by the Company as the Company performs the services. The Company…
- FY2025 10-K: …dated as of August 2, 2023, by and between Concentrix Corporation and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on August 2, 2023). 4.3 First Supplemental Indenture, dated as of August 2, 2023, by and between…
- GEO (The GEO Group, Inc.)
- FY2025 10-K: Owned Brooks County Detention Center, TX (2) 652 USMS - IGA Local & Federal Detention Medium March 2013 Perpetual None Owned Coastal Bend Detention Center, TX (2) 1,176 USMS/Hidalgo County Local & Federal Detention Medium July 2012 Perpetual None Owned Eagle Pass Correctional Facility, Eagle Pass, TX (2) 661 USMS -…
- FY2025 10-K: …statements accompanying this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in the forward-looking statements as a result of certain factors, including, but not limited to, those described under "Item…
- BR (BROADRIDGE FINANCIAL SOLUTIONS, INC.)
- FY2025 10-K: …and financial results and damage our reputation. We rely on the United States Postal Service ("USPS") and other third-party carriers to deliver communications and changes in our relationships with these carriers or an increase in postal rates or shipping costs may adversely impact demand for our products and services…
- FY2025 10-K: …2025-06-30 0001383312 br:SupplementalOfficerRetirementPlanMember us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2024-06-30 0001383312 br:SupplementalOfficerRetirementPlanMember us-gaap:SupplementalEmployeeRetirementPlanDefinedBenefitMember 2023-06-30 0001383312…
- ACN (Accenture plc)
- FY2025 10-K: …and industry organizations and associations Human and social services agencies; defense departments and military forces; public safety authorities, including justice departments; educational institutions; non-profit organizations; cities; transportation agencies; and postal, customs, revenue and tax agencies Our work…
- FY2025 10-K: …U.S. federal procurement agency-has instructed all federal agencies to review their contracts with consulting firms and technology product resellers contracting with the U.S. federal government, including AFS. These and similar spending reductions and contract reviews have resulted in and are likely to continue to…
Outside the U.S. (reported)
- EXLS (EXLSERVICE HOLDINGS, INC.)
- FY2025 10-K: ) are subject to numerous, changing and evolving laws and regulations on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, internal and disclosure control obligations, securities regulation, including anti-competition,…
- FY2025 10-K: …subsidiaries. Accordingly, under certain circumstances, we may not be able to pay dividends even if our board of directors would otherwise deem it appropriate. Risks Related to Our Industry Our industry may not develop in ways that we currently anticipate due to negative public reaction in the United States and…
- CNXC (CONCENTRIX CORPORATION)
- FY2025 10-K: …remote advisor, restrict unauthorized personnel and devices, and alert of attempts to circumvent control. Approximately 20% of our global team currently works remotely. The capacity of our data center and service delivery center operations, our nimble approach to remote staff, and the scalability of our customer…
- FY2025 10-K: …waiting time or handling time or a lack of promptness or technical expertise from our staff will negatively impact customer satisfaction and our business. Telephone, internet, and data service providers may elect not to renew their contracts with us or increase the cost of such services. If our communications or…
- BR (BROADRIDGE FINANCIAL SOLUTIONS, INC.)
- FY2025 10-K: …to changes in interest rates by analyzing the sensitivity to our earnings of a change in market interest rates on amounts borrowed from the revolving credit facility and Fiscal 2024 Amended Term Loan during the fiscal year ended June 30, 2025. Assuming a hypothetical increase of one hundred basis points in interest…
- FY2025 10-K: …and financial results and damage our reputation. We rely on the United States Postal Service ("USPS") and other third-party carriers to deliver communications and changes in our relationships with these carriers or an increase in postal rates or shipping costs may adversely impact demand for our products and services…
- ACN (Accenture plc)
- FY2025 10-K: …subsidiary. In addition, legislative and executive proposals remain under consideration or could be proposed in the future, which, if enacted, could place additional limitations on or even prohibit our eligibility to be awarded state or federal government contracts in the United States or could include requirements…
- FY2025 10-K: …and are considering implementing, changes in relevant tax, accounting and other laws, regulations and interpretations. There remains significant uncertainty around whether these changes will ultimately be implemented and, if implemented, the extent of their impact. The overall tax environment remains highly uncertain…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Maximus FY2025 10-K · Maximus Q2 FY2026 results, 2026