MMS

Maximus is a steady U.S.-government services contractor trading at just 9.9x FY2025 diluted EPS of $5.51 and 0.5x sales — a discount that more than compensates for its modest growth. The business is quietly improving: the MD&A shows gross margin expanding to 24.6% from 23.6% and operating margin to 9.7% from 9.2%, with FY2025 revenue up 2.4% to $5.43B despite an intentional ~1.8% drag from disposing of the Australia and Korea businesses. Stripped of those exits, organic revenue grew 3.9%, led by the U.S. Federal Services segment, and gross profit rose a healthy 7.1% organically — so the underlying federal engine is growing faster than the headline. ROE is a strong 19.1% and net income of $319M continued its recovery off the FY2023 trough of $162M.

Capital allocation is doing real work for shareholders. Diluted EPS grew 10.4% — roughly double net income's 3.9% — because management retired ~9.7% of shares via $447M of buybacks (up 512% YoY), funded by leverage management itself calls 'relatively low.' That buyback is the main upside lever at this valuation: every dollar of repurchase at ~10x earnings is highly accretive. Liabilities/equity sits at 1.43x and total leverage is modest for a contractor with predictable, government-backed revenue.