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Mastech Digital, Inc. (NYSEMKT:MHH) shareholders might be concerned after seeing the share price drop 11% in the last month. But over the last three years returns have been decent. After all, the stock has performed better than the market (51%) over that time, over which it gained 56%.
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
Mastech Digital was able to grow its EPS at 24% per year over three years, sending the share price higher. The average annual share price increase of 16% is actually lower than the EPS growth. So one could reasonably conclude that the market has cooled on the stock. We'd venture the lowish P/E ratio of 9.82 also reflects the negative sentiment around the stock.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
This free interactive report on Mastech Digital's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Mastech Digital shareholders gained a total return of 1.0% during the year. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 3.4% endured over half a decade. It could well be that the business is stabilizing. If you would like to research Mastech Digital in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
But note: Mastech Digital may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.