MAXIMUS (NYSE: MMS) and WageWorks (NYSE:WAGE) are both mid-cap business services companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, earnings, institutional ownership and dividends.

Valuation and Earnings

This table compares MAXIMUS and WageWorks’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MAXIMUS $2.45 billion 1.90 $209.42 million $3.18 22.53
WageWorks $364.71 million 6.55 $20.20 million $1.17 51.54

MAXIMUS has higher revenue and earnings than WageWorks. MAXIMUS is trading at a lower price-to-earnings ratio than WageWorks, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

MAXIMUS has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, WageWorks has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for MAXIMUS and WageWorks, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MAXIMUS 0 5 0 0 2.00
WageWorks 0 1 4 0 2.80

MAXIMUS currently has a consensus price target of $62.60, suggesting a potential downside of 12.63%. WageWorks has a consensus price target of $83.00, suggesting a potential upside of 37.65%. Given WageWorks’ stronger consensus rating and higher possible upside, analysts plainly believe WageWorks is more favorable than MAXIMUS.

Institutional & Insider Ownership

94.8% of MAXIMUS shares are owned by institutional investors. 3.1% of MAXIMUS shares are owned by insiders. Comparatively, 3.5% of WageWorks shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares MAXIMUS and WageWorks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MAXIMUS 8.54% 23.97% 15.63%
WageWorks 9.87% 9.60% 3.37%

Dividends

MAXIMUS pays an annual dividend of $0.18 per share and has a dividend yield of 0.3%. WageWorks does not pay a dividend. MAXIMUS pays out 5.7% of its earnings in the form of a dividend.

MAXIMUS Company Profile

MAXIMUS, Inc. provides business process services (BPS) to government health and human services agencies. The Company operates through three segments: U.S. Federal Services, Health Services and Human Services. The U.S. Federal Services segment provides BPS and program management for large government programs, independent health review and appeals services for both the United States Federal Government, and state-based programs and technology solutions for civilian federal programs. The Health Services segment provides a range of BPS, as well as related consulting services, for state, provincial and national government programs. The Human Services segment provides national, state and local human services agencies with a range of BPS and related consulting services for welfare-to-work, child support, higher education and K-12 special education programs.

WageWorks Company Profile

WageWorks, Inc. is engaged in administering Consumer-Directed Benefits (CDBs). The Company administers CBDs, including pre-tax spending accounts, such as Health Savings Accounts (HSAs), health and dependent care Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs), as well as Commuter Benefit Services, including transit and parking programs, wellness programs, Consolidated Omnibus Budget Reconciliation Act (COBRA) and other employee benefits. Its CDB programs assist employees and their families in saving money by using pre-tax dollars to pay for certain of their healthcare, dependent care and commuter expenses. Employers financially benefit from its programs through reduced payroll taxes. It provides operational support services to its clients and its cross-functional teams, including customer support and claims processing. It administers HSAs for employers that allow employee participants to invest funds to be used for qualified healthcare expenses.

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