Is Maximus (MMS) Now an Appropriate Stock for Value Investors?

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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that go unnoticed and are attractive buys, or offer great discounts off their fair value?

One way to find these companies is to look at several key financial indicators and ratios, many of which are crucial in the process of selecting value stocks. Let’s put Maximus, Inc. MMS into this equation and find out if this is a good choice for value investors right now, or if investors who subscribe to this methodology should look elsewhere for the best choices:

P / E ratio

A key metric that value investors always look at is the price / earnings ratio, or PE for short. It shows us how much investors are willing to pay for every dollar in profit in any given stock, and it’s easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the industry / sector average; and c) how it compares to the market as a whole.

On this front, Maximus has a 12-month PE ratio of 17, as you can see in the chart below:

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Image source: Zacks Investment Research

This level actually compares quite favorably to the market as a whole, as the PE for the S&P 500 is around 24.7. Additionally, if we focus on the long term trend of PE, Maximus’ current PE level puts it below its midpoint over the past five years.

Zacks investment research

Zacks investment research

Image source: Zacks Investment Research

The stock’s PE also compares favorably to the industry’s twelve-month PE ratio, which stands at 31.1. At the very least, it indicates that the title is currently relatively undervalued compared to its peers.

Zacks investment research

Zacks investment research

Image source: Zacks Investment Research

It’s also worth pointing out that Maximus has a futures PE ratio (price to earnings for this year) of just 19.1, which is above the current level. So it’s fair to expect the company’s stock price to rise in the near term.

P / S ratio

Another key indicator to note is the price / sales ratio. This approach compares the price of a given stock to its total sales, where a lower reading is generally considered better. Some people like this value metric more than others because it looks at sales, something that is much harder to manipulate with accounting tricks than profits.

Currently, Maximus has a P / S ratio of 1.3. That’s below the S&P 500 average, which currently sits at 4.9. Also, as we can see in the graph below, that number is below the highs of this particular stock in recent years.

Zacks investment research

Zacks investment research

Image source: Zacks Investment Research

On the contrary, it suggests some level of undervalued trading, at least by historical standards.

Broad value outlook

Overall, Maximus currently has a value score of B, which places it in the top 40% of all stocks we cover from this look. This makes Maximus a solid choice for value investors.

What about the stock as a whole?

While Maximus can be a good choice for value investors, there are many other factors to consider before investing in this name. In particular, it should be noted that the company has a Growth score of D and a Momentum score of D. This gives MMS a Zacks VGM score – or its overall fundamental score – of D. (You can read more at Zacks style scores here >>).

Meanwhile, the company’s recent earnings estimates have been mixed at best. While the current quarter estimate has seen an upward movement and no downward movement, and the current year estimate has seen an upward movement and no downward movement over the past two years. last months.

This had a mixed effect on the consensus estimate. While the current quarter consensus has fallen 2.1% in the past two months, the current year estimate has improved by 4%. You can see the trend of the consensus estimate and recent stock price development in the chart below:

Maximus, Inc. Price and consensus

Maximus, Inc. Price and consensus

Maximus, Inc. Price and consensus

Maximus, Inc. price-consensus-chart | Maximus, Inc. Quote

These mixed feelings from analysts are why the stock is ranked 3 Zacks (Hold) and this is why we are looking for a short term online performance of the company.

Final result

Maximus is an inspired choice for value investors as it’s hard to beat its incredible range of stats on this front. Additionally, a strong industry ranking (top 16%) further supports the stock’s growth potential. However, with a rank 3 of Zacks, it’s hard to get too excited about this business as a whole. Additionally, over the past couple of years, the industry as a whole has clearly underperformed the market as a whole, as you can see below:

Zacks investment research

Zacks investment research

Image source: Zacks Investment Research

So value investors may want to wait for estimates and analyst sentiment to turn around first on this name, but once that happens, this stock could be a compelling choice.

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