MMS
New math, same old discount
Maximus came out with a fresher, slightly less cheerful version of the story: fiscal 2026 adjusted EPS guidance is now $7.90 to $8.20 after the VA paused performance incentive payments from July 1 through Dec. 31, 2026.
That matters because this isn't just some random spreadsheet tweak. A chunk of the company's economics appears to be tied to those incentive payments, so when they get suspended, the profit story gets a haircut too.
Cheap for a reason?
At $55.18, MMS trades at about 6.9x the midpoint of management's new guidance. And if you strip out the incentives entirely, the math in the piece says annual adjusted EPS could land closer to $7, which would still put the stock at roughly 7.9x earnings.
For comparison, the article says Maximus is trading at 8.2x trailing earnings versus 11.5x for Leidos and 12x for Booz Allen, while also sporting a 15% trailing free cash flow yield and the lowest leverage in its peer group. Translation: the market is already pricing in a pretty gloomy version of reality, but maybe not gloomy enough if the contract change sticks.
The big investor question
If this VA change is temporary, the stock could look extra cheap. If it's permanent, then MMS isn't exactly getting away with a bargain-basement valuation for free — it's paying for the risk in plain sight.
Big picture: sometimes a “discount” is really just the market handing you a bill with the explanation printed in tiny font.