One-glance verdict
Undervalued
$22.21 our estimate vs market $7.25
Wall Street consensus: $12.75 (-42.6% lower than our fair-value estimate)
67% below our estimate, below the bear case
Fundamentals snapshot
Mastech Digital, Inc.
MHH · ASE · Industrials · Staffing & Employment Services
Current price
$7.25
52-week range
$5.50 - $8.37
Market cap
$87.09M
Balance sheet
Healthy
0.00x Concerning
Net cash $33.48M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Returns 2.3% on equity, ahead of 50% of its peers.
- Reward Free cash flow was positive in 9/10 years.
- Risk Operating margin compressed from 5.0% to -0.8% over 3 years.
What this company does
Mastech Digital, Inc.
Mastech Digital makes money in two main ways: by providing other companies with temporary technology experts for projects, and by consulting with them on how to better manage and use their digital data. The company earns revenue (the money it makes from sales) from fees for these staffing and data services. This is important because as technology gets more complex, many businesses need to hire outside specialists like Mastech to help them stay competitive.
How the company got here
Mastech Digital started in 1986 primarily as a staffing agency for technology workers, helping other companies find the IT talent they needed. [1, 10] For decades, this was its main business. Recognizing the growing importance of data, the company made a major shift in 2016, rebranding from Mastech Holdings to Mastech Digital to focus on more advanced digital services. [1] A key turning point was its 2017 purchase of InfoTrellis, a company specializing in data management, which significantly expanded its ability to offer complex data and analytics solutions. [1, 10]
What it actually does
Think of Mastech Digital as a two-part technology helper for other businesses. First, it provides companies with skilled technology professionals for temporary or long-term projects, much like a specialized temp agency for the tech world. [5] Second, it offers expert consulting services to help companies manage, analyze, and make sense of their vast amounts of data, a field often called 'digital transformation'. [9] They serve clients across many industries, including financial services, healthcare, and retail. [9, 11]
Talent
This is the company's traditional and largest business, focused on IT staffing. [5, 7] Companies pay Mastech Digital to find them skilled technology workers for specific needs, such as software developers, project managers, or cybersecurity experts. This part of the business acts as a matchmaker between companies that have tech projects and the skilled people needed to get the work done. This segment provides the majority of the company's revenue (the total money it brings in before expenses). [4]
Data & AI
This is the company's newer and more specialized division, which helps businesses with complex data projects. [6] Companies hire Mastech Digital for its expertise in organizing messy data, building systems to analyze it, and using artificial intelligence (AI) to uncover trends and make better decisions. [6] This segment offers project-based consulting, meaning clients pay for a specific outcome, like a new data system or an AI-powered sales tool. [9] This is a smaller but key area of future growth for the company. [4]
What management is betting on now
The company's leadership is heavily focused on becoming an 'AI-first' organization, meaning they want to infuse artificial intelligence into all their services. [4] Their main strategy is to use their deep expertise in data to help large clients adopt AI and modernize their operations. [5] They are also focused on efficiency through a cost-saving plan called EDGE (Efficiencies Driving Growth and Expansion) to improve profitability. [6, 8] The goal is to move beyond simple staffing to become a more essential partner for companies navigating the world of data and AI. [4]
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$3.23M
FY2024 Q4
$3.92M
FY2025 Q1
$-3.11M
FY2025 Q2
$3.24M
FY2025 Q3
$6.29M
FY2025 Q4
$4.33M
FY2026 Q1
$-3.23M
FY2026 Q2
$2.17M
Revenue
$41.45M
Net income
$-100.00K
Diluted EPS
-0.01
Operating cash flow
$2.23M
Free cash flow
$2.17M
Fetching…
Sources
Revenue
$41.08M
Net income
$264.00K
Diluted EPS
0.02
Operating cash flow
$-3.16M
Free cash flow
$-3.23M
Fetching…
Sources
Revenue
$45.46M
Net income
$972.00K
Diluted EPS
0.08
Operating cash flow
$4.36M
Free cash flow
$4.33M
Fetching…
Sources
Revenue
$48.50M
Net income
$941.00K
Diluted EPS
0.08
Operating cash flow
$6.48M
Free cash flow
$6.29M
Fetching…
Sources
Revenue
$49.10M
Net income
$135.00K
Diluted EPS
0.01
Operating cash flow
$3.30M
Free cash flow
$3.24M
Fetching…
Sources
Revenue
$48.32M
Net income
$-1.44M
Diluted EPS
-0.12
Operating cash flow
$-3.00M
Free cash flow
$-3.11M
Fetching…
Sources
Revenue
$50.75M
Net income
$297.00K
Diluted EPS
0.01
Operating cash flow
$4.04M
Free cash flow
$3.92M
Fetching…
Sources
Revenue
$51.84M
Net income
$1.88M
Diluted EPS
0.16
Operating cash flow
$3.30M
Free cash flow
$3.23M
Fetching…
Sources
Is it cheap or expensive?
Fair value $22.21 vs current price $7.25
Wall Street consensus is the average analyst price target: $12.75 (-42.6% lower than our fair-value estimate).
Our most-likely fair value is $22.21 a share — about 206.4% above today's price of $7.25, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $33.5M - more cash than debt. Interest coverage 0.0x.
Net debt
$-33.48M
Interest coverage
0.00x
Mastech Digital, Inc.'s profit covers its interest bill about 0.0 times over. which is stronger than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
MHH
BASELINE
Mastech Digital, Inc.
Total debt $2.12M Interest coverage 0.00x This is the baseline the peer rows are being compared against.
Total debt $608.00K Interest coverage -2.07x -100% vs MHH This peer has almost no interest-payment cushion compared with MHH.
Total debt $3.50M Interest coverage -9.94x -100% vs MHH This peer has almost no interest-payment cushion compared with MHH.
Total debt $29.22M Interest coverage 9.40x +793,399% vs MHH Carries about 7935.0x more debt cushion than MHH.
Total debt $0.00 Interest coverage 22.66x +1,912,234% vs MHH Carries about 19123.3x more debt cushion than MHH.
Total debt $128.70M Interest coverage 2.19x +184,355% vs MHH Carries about 1844.5x more debt cushion than MHH.
What you should know
The case for and against MHH
2 Rewards
1 Risk
Rewards
-
Returns 2.3% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 9/10 years.
Risks
-
Operating margin compressed from 5.0% to -0.8% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
42.65x
Forward P/E
7.51x
P/B
0.95x
P/S
0.49x
EV/EBITDA
15.71x
PEG ratio
0.50x
Profitability
How much profit each dollar creates
Gross margin
28.0%
Operating margin
-0.8%
Net margin
1.2%
ROE
2.3%
ROA
0.1%
Health
Liquidity and balance-sheet strength
Debt / equity
0.02x
Current ratio
4.10x
Quick ratio
3.75x
Total debt
$2.12M
Total cash
$35.60M
Growth
How the business has been compounding
Revenue TTM
$176.49M
Revenue 5Y CAGR
-3.6%
EPS TTM
0.17
EPS 5Y CAGR
-58.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$9.90M
Free CF TTM
$10.76M
FCF margin
6.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2013-12-05