CEOs tend to have a deep level of insight into their companies’ operations and performance. If these insiders are buying company stock, it’s generally a sign that business performance is strong and that the outlook for the stock is positive.
In this report, we are going to highlight a large CEO purchase at Maximus Inc (MMS:US). Maximus is a US company that provides business process services to government health and human services agencies. The group, which operates in the US, Canada, Australia, the UK, Europe, and Asia, helps government agencies implement programs rapidly with scalable operations and automated systems. It is listed on the New York Stock Exchange and currently has a market capitalization of $5.0 billion.
Maximus Inc: Insider Buying
Our insider transaction data shows that on 11 August, President and CEO Bruce Caswell spent $366,870 on Maximus shares. The insider picked up 4,500 shares at a price of $81.53 per share, increasing his holding to 121,316 shares.
High Trading IQ
This trade from the CEO stands out for a couple of reasons. Firstly, Mr. Caswell has made a sizable purchase. This suggests that he is confident the stock is set to move higher. Our data shows that his buy is the largest insider purchase at Maximus for several years.
Secondly, our data shows that Mr. Caswell has a good track record when it comes to timing his purchases and sales well. Our model gives the insider a long-term Trading IQ of 108 – well above average.
2021 Guidance Raised
Earlier this month, Maximus posted a strong set of third-quarter results.
For the quarter, the company generated record revenue of $1.24 billion, up 38% year on year, with revenue growth driven by Covid-19 response work including vaccination distribution support services, unemployment insurance program support, disease investigation, contact tracing, and other key initiatives.
Meanwhile, operating income totaled $139.6 million, with an operating margin of 11.2%, compared to $87.3 million and 9.7% in the same period last year. Diluted earnings per share were $1.51 as compared to $1.04 for the prior-year period.
On the back of these strong results, the company raised its guidance for fiscal 2021. Revenue is now expected to be between $4.2 billion and $4.25 billion while diluted earnings per share are expected to be between $4.65 and $4.75.
"We are in a solid position to further our long-term organic growth goals and evolve our ongoing strategy across all three segments,” said Mr. Caswell.
In light of these results and the raised guidance, we see the insider buying here as a bullish indicator.