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Mastech Holdings Inc (MHH)
:MHH
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Mastech Holdings (MHH) AI Stock Analysis

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MHH

Mastech Holdings

(NYSE MKT:MHH)

Rating:54Neutral
Price Target:
$7.50
▼(-5.18% Downside)
Mastech Holdings' overall stock score is primarily impacted by its financial performance challenges, including declining revenue and profit margins. While the company maintains a stable balance sheet and improved cash flow, the high P/E ratio indicates overvaluation. The earnings call provided mixed signals, with strong gross margins but declining revenues and order bookings.

Mastech Holdings (MHH) vs. SPDR S&P 500 ETF (SPY)

Mastech Holdings Business Overview & Revenue Model

Company DescriptionMastech Holdings, Inc. (MHH) is a provider of IT staffing services and solutions, specializing in the recruitment and placement of skilled professionals primarily in the technology sector. The company operates through two main segments: IT Staffing Services and Digital Transformation Services. Mastech Holdings focuses on delivering high-quality staffing solutions for its clients, which include Fortune 500 companies, while also offering digital transformation services that encompass data analytics, artificial intelligence, and cloud computing.
How the Company Makes MoneyMastech Holdings generates revenue primarily through its IT staffing services, which involve the placement of technology professionals in various roles and projects within client organizations. The company earns fees based on the hourly billing rates for the professionals it places, as well as through direct hire placements where it charges a percentage of the candidate's first-year salary. Additionally, Mastech's Digital Transformation Services provide another revenue stream by offering consulting and project-based solutions that help clients enhance their digital capabilities. Strategic partnerships with technology firms and a robust network of candidate relationships also contribute significantly to its earnings, allowing Mastech to meet client demands efficiently and effectively.

Mastech Holdings Earnings Call Summary

Earnings Call Date:Aug 13, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a cautious but stabilizing market with strong gross margin performance and solid financial position as key positives. However, notable revenue declines and reduced order bookings indicate significant challenges.
Q2-2025 Updates
Positive Updates
Gross Margin Performance
Achieved highest gross margin to date in the second quarter through focus on revenue quality, particularly among Financial Services clients.
Liquidity and Financial Position
Maintained a solid financial position with a cash balance of $27.9 million, no bank debt, and $22.2 million cash availability under a revolving credit facility.
Strategic Initiatives Progress
Significant progress on strategic initiatives, including transitioning finance and accounting functions to India, aiming to complete by Q4 2025.
Partnership with Informatica
Initial progress in building a differentiated offering through partnership with Informatica, creating joint solution offerings.
Negative Updates
Revenue Decline
Consolidated revenue decreased by 0.9% year-over-year, with IT Staffing Services revenue down 0.4% and Data and Analytics Services revenue down 3.2%.
Order Bookings Decrease
Second quarter order bookings totaled $5.8 million, significantly below last year's Q2 performance of $9.2 million.
Decline in Net Income
GAAP net income for Q2 2025 was $0.1 million, a sharp decline from $1.4 million in Q2 2024. Non-GAAP net income also decreased year-over-year.
Company Guidance
During the Mastech Digital Second Quarter 2025 Earnings Conference Call, the company did not provide guidance for future quarters, nor will it offer guidance in subsequent one-on-one meetings. However, they did discuss several financial metrics from the second quarter of 2025, highlighting a consolidated revenue of $49.1 million, which marked a 0.9% year-over-year decrease from Q2 2024. The Data and Analytics Services segment reported $8.6 million in revenue, a 3.2% decline compared to the previous year. Order bookings for the same segment totaled $5.8 million, down from $9.2 million in Q2 2024. The IT Staffing Services segment saw a slight revenue decline to $40.5 million, down 0.4% from the previous year. Despite these challenges, the company achieved its highest gross margin to date in the second quarter, attributed to a focus on revenue quality. The call also noted a decline in the billable consultant base by 11 consultants, and a consolidated gross profit decrease of 1.1% compared to Q2 2024. Additionally, Mastech Digital reported a GAAP net income of $0.1 million or $0.01 per diluted share, compared to $1.4 million or $0.12 per diluted share the previous year. Non-GAAP net income was $1.8 million or $0.15 per diluted share, down from $2.2 million or $0.19 per diluted share in Q2 2024. The company ended the quarter with a $27.9 million cash balance and no bank debt, with $22.2 million available under its revolving credit facility.

Mastech Holdings Financial Statement Overview

Summary
Mastech Holdings faces challenges in revenue and profit growth, with declining margins impacting overall profitability. The balance sheet remains stable with low leverage, but declining ROE is a concern. Cash flow performance shows improvement, though historical volatility suggests potential risks. Overall, the company needs to address revenue and margin pressures while maintaining its strong cash flow position.
Income Statement
45
Neutral
Mastech Holdings has experienced declining revenue growth, with a negative trend over the past few years, particularly a sharp decline in the TTM period. Profit margins have also decreased significantly, with net profit margin dropping to a low level in the TTM period. While gross profit margin remains relatively stable, the decline in EBIT and EBITDA margins indicates challenges in operational efficiency.
Balance Sheet
65
Positive
The company maintains a low debt-to-equity ratio, indicating prudent leverage management. However, return on equity has decreased over time, reflecting reduced profitability. The equity ratio remains healthy, suggesting a stable financial position despite the declining ROE.
Cash Flow
70
Positive
Cash flow metrics show improvement, with significant growth in free cash flow in the TTM period. The operating cash flow to net income ratio indicates strong cash generation relative to earnings. However, the volatility in free cash flow growth over the years suggests potential instability in cash flow management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue200.00M198.94M201.10M242.24M222.01M194.10M
Gross Profit55.55M55.60M51.04M63.18M59.44M51.54M
EBITDA3.66M7.29M-5.18M16.39M21.54M16.99M
Net Income868.00K3.40M-7.14M8.71M12.22M9.86M
Balance Sheet
Total Assets110.39M111.48M105.23M108.88M113.70M102.05M
Cash, Cash Equivalents and Short-Term Investments27.93M27.74M21.15M7.06M6.62M7.68M
Total Debt3.14M3.75M5.08M4.90M18.29M20.68M
Total Liabilities22.58M24.05M23.78M22.88M39.27M42.51M
Stockholders Equity87.81M87.43M81.44M86.00M74.43M59.53M
Cash Flow
Free Cash Flow7.28M6.25M15.64M11.78M3.32M20.93M
Operating Cash Flow7.64M7.19M15.98M12.62M5.22M21.23M
Investing Cash Flow-378.00K-941.00K-216.00K-818.00K-2.08M-9.63M
Financing Cash Flow340.00K654.00K-1.58M-10.41M-4.09M-6.71M

Mastech Holdings Technical Analysis

Technical Analysis Sentiment
Positive
Last Price7.91
Price Trends
50DMA
7.50
Positive
100DMA
7.44
Positive
200DMA
10.06
Negative
Market Momentum
MACD
0.11
Negative
RSI
56.95
Neutral
STOCH
72.64
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MHH, the sentiment is Positive. The current price of 7.91 is above the 20-day moving average (MA) of 7.58, above the 50-day MA of 7.50, and below the 200-day MA of 10.06, indicating a neutral trend. The MACD of 0.11 indicates Negative momentum. The RSI at 56.95 is Neutral, neither overbought nor oversold. The STOCH value of 72.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MHH.

Mastech Holdings Risk Analysis

Mastech Holdings disclosed 2 risk factors in its most recent earnings report. Mastech Holdings reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Mastech Holdings Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
64
Neutral
$10.73B15.657.58%2.01%2.80%-14.92%
63
Neutral
$138.18M56.814.06%2.48%-9.76%-53.41%
60
Neutral
$33.32M-9.37%-3.58%-89.07%
57
Neutral
$135.39M268.89-8.83%-8.31%-445.30%
54
Neutral
$94.16M112.991.01%5.16%
49
Neutral
$178.21M-10.53%-13.01%68.18%
49
Neutral
$67.51M-9.13%4.69%-24.36%-393.95%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MHH
Mastech Holdings
7.91
-1.09
-12.11%
DHX
DHI Group
3.01
1.37
83.54%
HSON
Hudson Global
9.88
-6.08
-38.10%
TBI
Trueblue
5.75
-1.65
-22.30%
BGSF
BGSF
6.15
-1.66
-21.25%
HQI
HireQuest
9.91
-4.12
-29.37%

Mastech Holdings Corporate Events

Executive/Board ChangesShareholder Meetings
Mastech Holdings Approves Stock Incentive Plan Expansion
Neutral
May 19, 2025

On May 14, 2025, Mastech Digital, Inc. held its Annual Meeting where shareholders elected two Class II directors, approved an amendment to increase the number of shares in the stock incentive plan by 800,000, and endorsed the compensation of executive officers. The meeting also included advisory votes on executive compensation and its frequency, which are non-binding.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 26, 2025