Why MAXIMUS, Inc. Shares Marched Higher

Is MAXIMUS' jump meaningful? Or just another movement?

Feb 6, 2014 at 7:25PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our thesis.

What: Shares of MAXIMUS, (NYSE:MMS) jumped 18% Thursday after the worldwide government services provider turned in better-than-expected fiscal first-quarter 2014 earnings.

So what: Quarterly sales grew 42%, to $406.6 million, which translated to diluted earnings growth of 61%, to $0.50 per share (including earnings of $0.01 per share from discontinued operations). By contrast, analysts were only looking for earnings of $0.42 per share on sales of $392.86 million.

Better yet, MAXIMUS increased its full-year fiscal 2014 guidance, calling for revenue between $1.6 billion and $1.68 billion, with diluted earnings per share from continuing operations between $1.95 and $2.05. Analysts, on average, were modeling 2014 earnings of $1.86 per share on sales of $1.62 billion.

Now what: CEO Richard Montoni weighed in: "Our new full-year guidance assumes continued high federal appeals volumes and includes contributions from several of our health insurance exchange contracts where the increased scope is expected to provide an ongoing benefit in the second quarter."

As it stands, shares might not look cheap trading around 30 times last year's earnings and 22 times next year's estimates. But I think that's a well-deserved premium considering MAXIMUS' solid growth on both the top  and bottom lines. Considering management is also rewarding investors with a small 0.4% dividend and selective share repurchases, I think the stock could still prove a bargain for patient long-term investors.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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