Should Value Investors Buy Maximus (MMS) Stock?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Maximus (MMS). MMS is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 12.24, while its industry has an average P/E of 14.49. MMS's Forward P/E has been as high as 15.98 and as low as 10.83, with a median of 14.28, all within the past year.

We should also highlight that MMS has a P/B ratio of 2.55. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. MMS's current P/B looks attractive when compared to its industry's average P/B of 3.43. MMS's P/B has been as high as 3.11 and as low as 2.22, with a median of 2.82, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MMS has a P/S ratio of 0.79. This compares to its industry's average P/S of 0.81.

Finally, investors will want to recognize that MMS has a P/CF ratio of 9.92. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. MMS's current P/CF looks attractive when compared to its industry's average P/CF of 20.28. Over the past year, MMS's P/CF has been as high as 14.59 and as low as 8.67, with a median of 12.05.

These are only a few of the key metrics included in Maximus's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MMS looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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