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Maximus (MMS): analysis traps
Where its figures could mislead a reader, and what to check before taking them at face value · Data: Q3 FY26, to Jun 30, 2026, filed Aug 6, 2026; rules v1.1
Maximus (MMS): 1 rule of 10 triggered on the filings to Jun 30, 2026: low P/E at a cyclical peak = undervalued. 2 to review; 2 not applicable. Each is a question to verify, with the normal explanation that would produce the same figures.
Check these first
Low P/E at a cyclical peak = undervalued Triggered · severity medium · confidence medium
The shares trade at 9.3× this year's net income of $371M, but that profit is at a high: the median of the last eight fiscal years is $241M, on which the same market value is 14.3×. A low multiple of peak profit is not a low multiple of normal profit.
Innocent reading: The business has changed for good (a merger, a new line, a pricing regime) and the old years are not its normal.
Adjusted profit = economic profit To review · confidence low
Adjusted EPS was 10% or more above GAAP in 2 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
A precise DCF value = the true value To review · confidence high
The DCF's point value is 114.95 a share (price 65.09); 77% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 76.02 to 153.88; across every method the research ran the range is -43 to 465. The value is a range; the decimals are not information.
Innocent reading: A stable, mature business with a narrow range of outcomes, where the point value is a fair summary.
Every rule
A01 FCF growth = the business improved Not triggered confidence high
Free cash flow did not rise ($401M → $366M): the trap does not arise.
The figures and how they are read
| Fiscal year before | FY24 |
| Fiscal year | FY25 |
| Operating cash flow, year before | $515M |
| Operating cash flow | $429M |
| Capex, year before | $114M |
| Capex | $63M |
| Free cash flow, year before | $401M |
| Free cash flow | $366M |
| Change in FCF | −$35M |
| Change in capex | −$51M |
| Working capital: change in its cash contribution | −$180M |
FCF = operating cash flow − cash capex; ΔFCF = ΔOCF − ΔCapEx; the working-capital part is the change in the cash-bridge items (receivables, inventory, payables, accruals), with the sign of the cash flow statement
Source: FY25 (cash flow statement, fiscal year) · FY24 (cash flow statement, fiscal year before)
A07 Stock compensation added back = no economic cost Not triggered confidence high
Stock compensation is 0.8% of revenue: small enough that adding it back changes little.
The figures and how they are read
| Fiscal year | FY25 |
| Stock compensation | $41M |
| Revenue | $5.4B |
| SBC / revenue | +0.8% |
| Buybacks | $447M |
| Buybacks / SBC | 10.9 |
| Diluted shares, year before | 61.5M shares |
| Diluted shares | 57.9M shares |
| Diluted shares: change | -5.8% |
SBC / revenue from the cash flow statement's add-back; the diluted weighted share count year over year; buybacks from the financing section
Source: FY25 (stock compensation, buybacks and the diluted share count, fiscal year)
B02 Receivables growing = future cash is certain Not triggered confidence medium
Receivables grew -3% against revenue -5% in Q3 FY26; DSO 89 against a median of 70: collections are keeping pace with sales.
The figures and how they are read
| Quarter | Q3 FY26 |
| Revenue, year over year | -5.1% |
| Receivables, year over year | -2.8% |
| Quarter before | Q2 FY26 |
| Revenue y/y, quarter before | -4.1% |
| Receivables y/y, quarter before | +1.6% |
| Days sales outstanding | 88.8 |
| DSO, median of eight quarters | 70.0 |
| Receivables | $1.4B |
| Revenue | $1.3B |
receivables and revenue against the same quarter a year earlier; DSO = receivables / quarterly revenue × days, against the median of the eight quarters before
Source: Q3 FY26 (receivables and revenue) · Q3 FY25 (the same quarter a year earlier)
B08 Adjusted profit = economic profit To review confidence low
Adjusted EPS was 10% or more above GAAP in 2 of the last 3 quarters: read the reconciliation before taking the adjusted figure.
The figures and how they are read
| Quarter / adjusted EPS / GAAP EPS / gap | 2025-12-31 / 1.85 / 1.7 / 0.081; 2026-03-31 / 2.07 / 1.8 / 0.13; 2026-06-30 / 2.22 / 1.95 / 0.122 |
| Quarters with adjusted ≥ 10% above GAAP | 2 |
| Quarters compared | 3 |
| Latest gap | +12.2% |
the analysts' 'actual' (usually the company's adjusted EPS) against GAAP net income ÷ diluted shares for the matching quarter; a gap of 10% or more counts (the stand-in until three releases' reconciliation tables are on file)
Source: 2025-12-31 (adjusted 1.85 vs GAAP 1.70) · 2026-03-31 (adjusted 2.07 vs GAAP 1.80) · 2026-06-30 (adjusted 2.22 vs GAAP 1.95)
What would show the trap does not apply
- The reconciliation shows the excluded items ending (a restructuring with its final charge, a settlement paid) and the gap to GAAP closes in the next quarters
- The excluded items are only amortisation of acquired intangibles and the cash paid for the deals is in the investing cash flow
Look again: next filing.
C02 Low net debt = no refinancing risk Not triggered confidence medium
$56M comes due within a year, 8.8× covered by cash and investments of $57M plus $433M of free cash flow.
The figures and how they are read
| Cash and investments | $57M |
| Debt | $1.6B |
| Net debt | $1.6B |
| Due within a year | $56M |
| Read from | the debt maturity table |
| Free cash flow, twelve months | $433M |
| Cash plus free cash flow | $490M |
| Coverage of what is due | 8.8 |
| Due in the second year | $72M |
| Balance sheet date | 2026-06-30 |
due within a year from the maturity table (else the current portion of debt), against cash and investments plus free cash flow over the last twelve months (zero if negative); no credit lines assumed
Source: FY25 (debt maturities, cash and investments)
D03 EPS growth = profit growth Not triggered confidence high
EPS rose 5% and net income fell 2% in Q3 FY26; the share count fell 6.9%: EPS growth follows profit growth.
The figures and how they are read
| Quarter | Q3 FY26 |
| Quarter before | Q3 FY25 |
| EPS, year before | $1.86 |
| EPS | $1.95 |
| Net income, year before | $106M |
| Net income | $104M |
| Diluted shares, year before | 57.0M shares |
| Diluted shares | 53.1M shares |
| EPS growth | +5.0% |
| Net income growth | -2.2% |
| Diluted shares: change | -6.9% |
| eps from profit | -$0.04 |
| eps from share count | $0.13 |
EPS and net income against the same quarter a year earlier; the EPS bridge attributes the change to profit first, then to the share count (the order is fixed and disclosed)
Source: Q3 FY26 (net income, diluted shares, EPS) · Q3 FY25 (the same quarter a year earlier)
E02 Low P/E at a cyclical peak = undervalued Triggered severity medium · confidence medium
The shares trade at 9.3× this year's net income of $371M, but that profit is at a high: the median of the last eight fiscal years is $241M, on which the same market value is 14.3×. A low multiple of peak profit is not a low multiple of normal profit.
The figures and how they are read
| market value | $3.5B |
| net income ttm | $371M |
| pe ttm | 9.30 |
| net income median fy | $241M |
| pe mid cycle | 14.30 |
| net income peak fy | $319M |
| years | FY18 / 221.0; FY19 / 241.0; FY20 / 215.0; FY21 / 291.0; FY22 / 204.0; FY23 / 162.0; FY24 / 307.0; FY25 / 319.0 |
| down years in window | 3 |
P/E on the trailing twelve months' net income against the P/E on the median net income of the last eight fiscal years (a mid-cycle stand-in); 'at a peak' = this year's profit at or above 90% of the best year and at least 1.3× the median
Source: Q3 FY26 (net income, trailing twelve months)
What would explain it innocently
- The business has changed for good (a merger, a new line, a pricing regime) and the old years are not its normal
- The market is right that profit will fall, and the price already says so
- Capacity has left the industry, so the cycle's trough is higher than before
What to look for in the filing
- Where the industry's prices and volumes stand against their own history
- Capacity on order across the industry
- Management's view of the cycle in the MD&A
What would show the trap does not apply
- Profit holds at this level through the next two years (the eight-year peak was a new base, not a top)
- The industry's capacity and prices stay where they are rather than reverting
Look again: next filing.
E07 A precise DCF value = the true value To review confidence high
The DCF's point value is 114.95 a share (price 65.09); 77% of it is the terminal value, a number about years no one has seen. Moving operating margin by ±3 pts alone takes it from 76.02 to 153.88; across every method the research ran the range is -43 to 465. The value is a range; the decimals are not information.
The figures and how they are read
| dcf value | 114.95 |
| price | 65.09 |
| terminal value share | +76.6% |
| swing by input | Operating margin / ±3 pts / 76.02 / 153.88; WACC / ±1 pt / 88.78 / 157.18; Revenue growth (each year) / ±5 pts / 86.86 / 148.97; Tax rate / ±5 pts / 105.47 / 124.43 |
| range all methods | -42.63; 464.56 |
the DCF's point value against the share of it that is the terminal value and the value at each input moved by one step (growth ±5 pts, WACC ±1 pt, margin ±3 pts …); the range across every method the research ran
Source: 2026-11-08 (valuation research)
What would explain it innocently
- A stable, mature business with a narrow range of outcomes, where the point value is a fair summary
- The inputs that matter most are themselves well known (a regulated return, a long contract)
What to look for in the filing
- Which input you believe differs from the research's and why
- What the price implies for growth (the reverse DCF on the fair-value page)
What would show the trap does not apply
- The DCF's value is robust to the terminal growth and discount rate (the range's low end is still above the price)
- The company's cash flows over the next three years track the DCF's early years
Look again: next filing.
J06 A bank's low P/E and high profit = safe Not applicable
not a bank
J08 A REIT's low net income = the dividend is unsafe Not applicable
not a REIT
What the statuses mean
Triggered: the filings show the pattern; read the normal explanations and the missing evidence before concluding anything. To review: one quarter or a weak signal; a reader's judgement, not a pattern. Not triggered: the pattern is absent on these figures. Insufficient data: the filings read so far do not hold what the rule needs; this is not a clean bill. Not applicable: the rule is not meant for this kind of company (a bank's working capital, a loss-making quarter's EPS growth). Out of date: the latest filing is more than fifteen months old.
Severity is what the pattern could mean for cash, value or solvency; confidence is how reliable the inputs and the reading are. The two are kept apart.
Record a view
A reader's judgement, grounds, what would change it and the next review; kept in the browser (needs JavaScript).
Every rule and the companies it triggers on → Maximus: cash flow →
Each rule reads the company's own filings by a fixed formula and says what would explain the same figures innocently. A triggered rule is a question to verify, not a finding of manipulation, and not a view on the stock. Missing data is shown as missing, never as clear. Not investment advice.