Government services provider Maximus (NYSE: MMS) missed Wall Street’s revenue expectations in Q1 CY2026, with sales falling 4.1% year on year to $1.31 billion. The company’s full-year revenue guidance of $5.28 billion at the midpoint came in 0.8% below analysts’ estimates. Its non-GAAP profit of $2.07 per share was 5.3% above analysts’ consensus estimates.

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Company Overview

With nearly 50 years of experience translating public policy into operational programs that serve millions of citizens, Maximus (NYSE: MMS) provides operational services, clinical assessments, and technology solutions to government agencies in the U.S. and internationally.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $5.32 billion in revenue over the past 12 months, Maximus is one of the larger companies in the business services industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, Maximus’s sales grew at a solid 7.4% compounded annual growth rate over the last five years. This is an encouraging starting point for our analysis because it shows Maximus’s demand was higher than many business services companies.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. Maximus’s recent performance shows its demand has slowed as its annualized revenue growth of 1.9% over the last two years was below its five-year trend. We’re wary when companies in the sector see decelerations in revenue growth, as it could signal changing consumer tastes aided by low switching costs.

This quarter, Maximus missed Wall Street’s estimates and reported a rather uninspiring 4.1% year-on-year revenue decline, generating $1.31 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 2.3% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not accelerate its top-line performance yet. At least the company is tracking well in other measures of financial health.

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Adjusted Operating Margin

Maximus was profitable over the last five years but held back by its large cost base. Its average adjusted operating margin of 8.9% was weak for a business services business.

On the plus side, Maximus’s adjusted operating margin rose by 2.6 percentage points over the last five years, as its sales growth gave it operating leverage.

In Q1, Maximus generated an adjusted operating margin profit margin of 12.1%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Maximus’s EPS grew at 11.9% compounded annual growth rate over the last five years, higher than its 7.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Maximus’s earnings can give us a better understanding of its performance. As we mentioned earlier, Maximus’s adjusted operating margin was flat this quarter but expanded by 2.6 percentage points over the last five years. On top of that, its share count shrank by 12.4%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Maximus, its two-year annual EPS growth of 21.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q1, Maximus reported adjusted EPS of $2.07, up from $2.01 in the same quarter last year. This print beat analysts’ estimates by 5.3%. Over the next 12 months, Wall Street expects Maximus’s full-year EPS of $7.70 to grow 17.1%.

Key Takeaways from Maximus’s Q1 Results

It was good to see Maximus beat analysts’ EPS expectations this quarter. We were also happy its full-year EPS guidance narrowly outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed and its full-year revenue guidance fell slightly short of Wall Street’s estimates. Overall, this quarter could have been better. The stock remained flat at $64.09 immediately following the results.

So should you invest in Maximus right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).