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Mastech Holdings Inc (MHH)
XASE:MHH
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Mastech Holdings
(NYSE MKT:MHH)
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Rating:56Neutral
Price Target:
$7.50
▼(-4.82% Downside)
Action:ReiteratedDate:12/10/25
Mastech Holdings' overall stock score reflects its financial challenges, particularly in profitability and revenue growth, despite a strong balance sheet and cash flow. Technical indicators suggest a lack of strong momentum, and valuation metrics are poor due to negative earnings. The earnings call provides some optimism with strategic initiatives, but immediate challenges remain significant.
Positive Factors
Strong Liquidity Position
A strong liquidity position with substantial cash reserves and no bank debt enhances financial flexibility, enabling strategic investments and resilience against market fluctuations.
EDGE Program Initiative
The EDGE program focuses on efficiency and cost management, which can lead to improved operational performance and long-term profitability through streamlined processes and disciplined spending.
Record Gross Margins
Record gross margins indicate effective pricing strategies and high-value engagements, which can sustain profitability and competitive positioning in the IT staffing market.
Negative Factors
Decline in Revenue
A decline in revenue from key segments indicates challenges in market demand or competitive pressures, potentially impacting long-term growth and market share.
Reduced Consultant Headcount
A reduction in consultant headcount can limit service capacity and client engagement, affecting revenue generation and client satisfaction over time.
Decreased Bookings in Data and Analytics
Decreased bookings in the Data and Analytics segment suggest weakening demand or competitive challenges, which could hinder future revenue and strategic growth in this area.
Mastech Holdings (MHH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$68.55M
Dividend YieldN/A
Average Volume (3M)34.29K
Price to Earnings (P/E)114.5
Beta (1Y)0.96
Revenue Growth1.24%
EPS Growth97.14%
CountryUS
Employees1,525
SectorIndustrials
Sector Strength72
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)0.21
Shares Outstanding11,697,331
10 Day Avg. Volume46,763
30 Day Avg. Volume34,294
Financial Highlights & Ratios
PEG Ratio-0.35
Price to Book (P/B)1.99
Price to Sales (P/S)0.87
P/FCF Ratio27.81
Enterprise Value/Market Cap0.58
Enterprise Value/Revenue0.20
Enterprise Value/Gross Profit0.74
Enterprise Value/Ebitda8.12
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.89
Revenue Forecast (FY)$195.02M
Mastech Holdings Business Overview & Revenue Model
Company DescriptionMastech Digital, Inc., together with its subsidiaries, provides digital transformation IT services to large, medium-sized, and small companies in the United States. It operates through two segments, Data and Analytics Services, and IT Staffing Services. The company offers data management and analytics services, including project-based consulting services in the areas of master data management, enterprise data integration, big data and analytics, and digital transformation by using onsite and offshore resources. It also provides a range of IT staffing services in the areas of data management and analytics, cloud, mobility, social, automation, business intelligence/data warehousing, web services, enterprise resource planning and customer resource management, and e-business solutions. In addition, the company offers digital transformation services, such as digital learning services; and cloud-based enterprise application across sales, marketing, and customer service organizations. It provides its services across various industry verticals, including financial services, government, healthcare, manufacturing, retail, technology, telecommunications, and transportation. The company was formerly known as Mastech Holdings, Inc. and changed its name to Mastech Digital, Inc. in September 2016. Mastech Digital, Inc. was founded in 1986 and is headquartered in Pittsburgh, Pennsylvania.
How the Company Makes MoneyMastech Holdings generates revenue primarily through its IT staffing services, which involve placing qualified professionals in contract and permanent roles within client organizations. The company charges clients a fee for these staffing services, typically based on a percentage of the employee's salary or a fixed rate for contract placements. Additionally, Mastech earns revenue from its digital transformation solutions, which include consulting services and project-based engagements aimed at helping businesses adopt new technologies and improve operational efficiency. Key revenue streams include fees from staffing contracts, consulting projects, and training services. The company may also benefit from strategic partnerships with technology providers and industry associations that expand its service offerings and client base, contributing to its overall earnings growth.
Mastech Holdings Earnings Call Summary
Earnings Call Date:Feb 19, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: meaningful operational and strategic positives (record bill rates, strong Q4 bookings, solid cash position, share repurchase authorization, stable non-GAAP profitability and EDGE-driven efficiencies) balanced against notable revenue declines (consolidated, Data & Analytics and staffing volume), one-time transition/severance costs that depressed GAAP results, and a near-term headwind from a top-customer in-sourcing program. Management emphasized that 2025 was foundational and positioned the company to invest and execute in 2026, but near-term visibility and revenue pressures remain.Q4-2025 Updates
Positive Updates
Strong Q4 Bookings Momentum
Q4 bookings totaled $11.3 million versus $8.2 million in the prior-year period (up ~37%), driven by strong renewals and broad-based demand across healthcare, financial services and consumer clients.
Record High Average Bill Rate
Achieved an all-time high average bill rate of $87.32 in Q4, reflecting disciplined pricing and a shift to higher-value, higher-margin staffing engagements.
Solid Liquidity and No Debt
Cash balance of $36.5 million as of 12/31/2025, no bank debt outstanding and $19.9 million available under the revolving credit facility; DSO at 54 days (in target range).
Share Repurchase Activity and Authorization
Repurchased ~$0.7 million in Q4 and ~$2.2 million for the full year (avg prices $7.20 and $7.49). Board authorized a new repurchase program up to $5 million effective Feb 16, 2026.
Non-GAAP Profitability Stability
Full-year non-GAAP net income of $8.6 million ($0.72 per diluted share) was flat year-over-year, and Q4 non-GAAP net income was $2.5 million ($0.21 per diluted share) vs $2.8 million prior-year, showing resilient underlying profitability after adjustments.
Gross Margins Stabilized for the Year
Full-year gross margins remained essentially flat year-over-year despite revenue declines, indicating margin discipline and cost management progress under the EDGE program.
Operational and Strategic Progress (EDGE and AI Focus)
EDGE initiative delivered efficiencies and freed capacity for reinvestment; advanced data-platform partnerships (GCP, Snowflake, Informatica) and established an industry solutions practice focused on AI-powered workflows to position the company for AI-led growth in 2026.
Improved Q4 GAAP Net Income versus Prior Year Quarter
Q4 GAAP net income of $1.0 million ($0.08 per diluted share) compared with $0.3 million ($0.02) in the prior-year quarter, aided by lower one-time costs in Q4.
Negative Updates
Decline in Consolidated Revenue
Consolidated Q4 revenue was $45.5 million, down 10.4% year-over-year; full-year 2025 revenue was $191.4 million, down 3.8% year-over-year, reflecting continued revenue pressure in the market.
Data & Analytics Segment Weakness
Data and Analytics Services Q4 revenue declined 24% year-over-year to $7.8 million, driven largely by backlog reversal from some 2024 engagements; full-year D&A revenue declined 9.1% to $33.3 million.
IT Staffing Volume Contraction
IT Staffing Services Q4 revenue declined 7% year-over-year to $37.7 million while billable consultant base fell by 168 consultants (16.7% decline); billable headcount was 840 at quarter end.
Gross Profit and Margin Pressure in Quarter
Q4 gross profit declined 12.5% year-over-year to $12.9 million and gross margin decreased by 70 basis points versus Q4 2024, with overall margin impacted by business mix and reduced Data & Analytics revenue share.
Higher Reported Costs Impacting GAAP Results
Full-year GAAP net income fell to $0.6 million ($0.05 per diluted share) from $3.4 million ($0.28) prior year, driven in part by $5.0 million in severance and finance/accounting transition costs in 2025 (versus $2.1 million in 2024).
Customer In-sourcing Headwind
In-sourcing by one of the company's top-10 customers (implemented in Q4 across vendors) materially impacted staffing volumes and is expected to continue through the first half of 2026, creating near-term revenue headwinds.
Backlog Reversals from Prior-Year Projects
Revenue was negatively affected by backlog reversals from some 2024 engagements, contributing to the year-over-year declines in the Data & Analytics segment and reduced visibility in the near term.
Limited Near-Term Visibility
Management reiterated that the market backdrop remains challenging and client IT budgets remain cautious, leaving near-term revenue visibility limited despite pockets of demand.
Company Guidance
Management explicitly provided no formal forward guidance on the call, but offered directional commentary and many operational and financial metrics: they called 2026 a “year of execution” with three priorities (sustainable growth, customer value, differentiated capabilities) and said the in‑sourcing impact from a top-10 client should continue through H1 2026 while the finance transition is complete and most severance is done. Key reported metrics included Q4 consolidated revenue $45.5M (‑10.4% YoY) and FY2025 revenue $191.4M (‑3.8% YoY); Q4 IT Staffing revenue $37.7M (‑7%), Q4 Data & Analytics $7.8M (‑24%) and FY D&A $33.3M (‑9.1%); Q4 bookings $11.3M (vs. $8.2M prior year, ~+37%), Q4 gross profit $12.9M (‑12.5%) with gross margin down 70 bps, Q4 GAAP net income $1.0M ($0.08/diluted) and non‑GAAP net income $2.5M ($0.21/diluted), FY GAAP net income $0.6M ($0.05) and FY non‑GAAP $8.6M ($0.72); Q4 severance/transition costs $0.7M and FY costs $5.0M; billable headcount down 168 consultants (‑16.7%) to 840 with total employees 1,488, all‑time high average bill rate $87.32, cash $36.5M, no bank debt, $19.9M revolver availability, DSO 54 days, repurchases ~$0.7M in Q4 (avg $7.20) and ~$2.2M FY (avg $7.49), ~123,556 shares left under the expired program and a new $5.0M repurchase authorization effective Feb 16, 2026.Mastech Holdings Financial Statement Overview
Summary
Mastech Holdings faces challenges with declining revenue and profitability margins, impacting its income statement performance. However, the balance sheet remains strong with low leverage, and cash flow metrics indicate robust cash generation. The company needs to address operational inefficiencies to improve profitability while maintaining its financial stability.Income Statement
Mastech Holdings has experienced declining revenue growth, with a negative trend in recent years, including a -1.67% in TTM. Gross profit margin remains relatively stable at around 27.77% in TTM, but net profit margin has significantly decreased to 0.43% in TTM, indicating profitability challenges. The EBIT and EBITDA margins have also declined, reflecting operational inefficiencies.45
Neutral
Balance Sheet
The company's balance sheet shows a low debt-to-equity ratio of 0.036 in TTM, indicating low leverage and financial stability. However, return on equity has decreased to 0.996% in TTM, suggesting reduced profitability for shareholders. The equity ratio remains strong, reflecting a solid capital structure.65
Positive
Cash Flow
Mastech Holdings has shown a strong free cash flow growth rate of 42.16% in TTM, indicating improved cash generation. The operating cash flow to net income ratio is 0.387, suggesting efficient cash conversion. The free cash flow to net income ratio is high at 0.953, highlighting strong cash flow relative to net income.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 196.66M | 198.94M | 201.10M | 242.24M | 222.01M | 194.10M |
| Gross Profit | 54.24M | 55.60M | 51.04M | 63.18M | 59.44M | 51.54M |
| EBITDA | 4.92M | 9.39M | -5.18M | 17.79M | 18.85M | 17.64M |
| Net Income | -66.00K | 3.40M | -7.14M | 8.71M | 12.22M | 9.86M |
Balance Sheet | ||||||
| Total Assets | 112.62M | 111.48M | 105.23M | 108.88M | 114.07M | 102.05M |
| Cash, Cash Equivalents and Short-Term Investments | 32.75M | 27.74M | 21.15M | 7.06M | 6.62M | 7.68M |
| Total Debt | 2.75M | 3.75M | 5.08M | 4.90M | 18.29M | 20.68M |
| Total Liabilities | 24.61M | 24.05M | 23.78M | 22.88M | 39.64M | 42.51M |
| Stockholders Equity | 88.01M | 87.43M | 81.44M | 86.00M | 74.43M | 59.53M |
Cash Flow | ||||||
| Free Cash Flow | 10.35M | 6.25M | 15.64M | 11.78M | 3.32M | 20.93M |
| Operating Cash Flow | 10.81M | 7.19M | 15.98M | 12.62M | 5.22M | 21.23M |
| Investing Cash Flow | -485.00K | -941.00K | -216.00K | -818.00K | -2.08M | -9.63M |
| Financing Cash Flow | -834.00K | 654.00K | -1.58M | -10.41M | -4.09M | -6.71M |
Mastech Holdings Technical Analysis
Negative
7.88
Price Trends
6.95
Negative
7.07
Negative
7.25
Negative
Market Momentum
-0.27
Positive
29.85
Positive
11.53
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MHH, the sentiment is Negative. The current price of 7.88 is above the 20-day moving average (MA) of 6.69, above the 50-day MA of 6.95, and above the 200-day MA of 7.25, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 29.85 is Positive, neither overbought nor oversold. The STOCH value of 11.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MHH.
Mastech Holdings Risk Analysis
Mastech Holdings disclosed 1 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
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $167.79M | 23.95 | 11.08% | 2.55% | -12.65% | 368.36% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
60 Neutral | $66.75M | -7.85 | -14.43% | 41.67% | -36.79% | -507.05% | |
56 Neutral | $68.55M | 114.46 | -0.08% | ― | 1.24% | 97.14% | |
56 Neutral | $107.93M | -8.44 | -12.89% | ― | -9.13% | -1032.39% | |
48 Neutral | $25.38M | -0.76 | -51.65% | ― | -15.43% | -43.45% | |
44 Neutral | $10.20M | -1.07 | -78.12% | ― | -7.26% | -1.37% |
* Industrials Sector Average
MHH
Mastech Holdings
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-42.92%
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JOB
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IPDN
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1.20
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-60.00%
BGSF
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6.08
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HQI
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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.