Should You Buy It? Maximus to the Max
The company said that the accelerated share repurchase will not affect its previous $40 million buyback program. Management said it still plans to complete the program over time. Maximus ended the September quarter with $196.7 million of cash on the balance sheet and no debt. Additionally, the company returns cash to shareholders through its 10-cent quarterly dividend (1% yield).
Maximus also announced solid fiscal fourth-quarter results Nov. 14. The company earned 68 cents a share, which was 3 cents ahead of expectations. Revenue grew 17.5% year over year to $201.9 million.
Credit CEO Richard Montoni, who took office in April 2006, for Maximus' new strategy and growth outlook. His goal is to shift the company away from growing revenue at all costs toward more -- and smaller -- contracts (under $50 million) that usually carry higher margins.
Maximus is targeting $850 million to $880 million of revenue for next year, including 15% to 20% organic growth. Because of the visibility of its government contracts, Maximus estimates that 83% of expected 2008 revenue is already booked into the backlog.Even if some spending is cut because of depressed local government budgets, about 70% of the company's sales come from federally mandated programs. Maximus shares are up more than 27% year to date, but I continue to believe that it offers value at current levels. While failure to sell the entire business was a near-term disappointment to some investors, I believe that focus will shift toward the company's impressive top-line growth and improved profitability in its core outsourcing business.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV