Maximus, Inc. (MMS): what the price requires
The current priced-in claim for Maximus, Inc. (MMS) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MMS
Headline
| Field | Value |
|---|---|
| Ticker | MMS |
| Company | Maximus, Inc. |
| Current price | $58.10/sh |
| Composition | Program Operations 49% / Clinical Services 39% / Employment & Other 7% / Technology Solutions 6% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 5.0% |
| Operating margin today | 11.4% |
| Margin compression implied | -6.4pp |
| Multiple paid | 7x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration 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 5.8% sits below it).
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.03σ |
| cohort percentile (of 210 peers) | 9 |
| implied end-window share | 0% |
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 | 0.79x | 5 | justifies |
| Earnings | 0.81x | 5 | justifies |
| Relative | 0.40x | 5 | justifies |
| Growth | 0.75x | 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 6.5%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $89.38 | 0.65x | yes | FCF base $0.4B, growth -1% (input: historical growth), terminal g 0.5%, WACC 6.5%, 5yr projection |
| DCF Exit Multiple | Growth | $77.55 | 0.75x | yes | Exit EV/EBITDA: 5.6x / 7.6x / 9.6x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $115.61 | 0.50x | yes | P/E 15.4x (blended: static sector reference 20x + trailing (TTM) 9x), scenarios: 13.0x / 15.4x / 17.8x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $73.93 | 0.79x | yes | BV/sh $31.09, ROE (TTM) 22.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $113.37 | 0.51x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $39.54 | 1.47x | yes | Rev $5.3B, growth -1% (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 | $232.05 | 0.25x | yes | EPS $6.63, growth 35% (input: historical EPS growth), PEG=0.24 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $74.64 | 0.78x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.43B × (1−23%) / WACC 6.5% → EPV (no growth) |
| Residual Income | Asset | $106.44 | 0.55x | yes | BV $31.09 + 5yr PV of (ROE (TTM) 22.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $68.10 | 0.85x | yes | √(22.5 × EPS $6.63 × BVPS $31.09) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $129.12 | 0.45x | yes | EBITDA $0.61B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $46.74 | 1.24x | yes | FCF $372.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $39.10 | 1.49x | yes | SBC-adj FCF $0.33B (FCF $0.37B − SBC $0.04B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $213.93 | 0.27x | yes | EPS $6.63 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $17.46 | 3.33x | yes | BV $31.09 × (ROIC 3.6% / WACC 6.5%) |
| P/Sales Sector | Relative | $146.13 | 0.40x | yes | Revenue $5.32B × sector P/S 1.5x |
| PEG Fair Value | Relative | $248.63 | 0.23x | yes | EPS $6.63 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $71.68 | 0.81x | yes | EPS $6.63 / 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 | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.4b |
| Net debt / NOPAT (after-tax) | 2.90x |
| Net debt / operating income (pre-tax) | 2.25x |
| Interest coverage | 7.0x |
| Share count CAGR (buyback) | -3.3% |
| 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)
- (no filing in the citation store)
- LDOS (Leidos Holdings, Inc.)
- (no filing in the citation store)
- SAIC (Science Applications International Corporation)
- (no filing in the citation store)
- CACI (CACI International Inc)
- (no filing in the citation store)
- PSN (Parsons Corporation)
- (no filing in the citation store)
- ACN (Accenture plc)
- (no filing in the citation store)
U.S. Services (reported)
- EXLS (EXLSERVICE HOLDINGS, INC.)
- (no filing in the citation store)
- CNXC (CONCENTRIX CORPORATION)
- (no filing in the citation store)
- GEO (The GEO Group, Inc.)
- (no filing in the citation store)
- BR (BROADRIDGE FINANCIAL SOLUTIONS, INC.)
- (no filing in the citation store)
- ACN (Accenture plc)
- (no filing in the citation store)
Outside the U.S. (reported)
- EXLS (EXLSERVICE HOLDINGS, INC.)
- (no filing in the citation store)
- CNXC (CONCENTRIX CORPORATION)
- (no filing in the citation store)
- BR (BROADRIDGE FINANCIAL SOLUTIONS, INC.)
- (no filing in the citation store)
- ACN (Accenture plc)
- (no filing in the citation store)
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.
- 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