MHH: Mastech Digital Reports Q2 and Improved Bookings for D&A
NYSE:MHH
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Mastech (NYSE:MHH) reported a year-over-year revenue decline of 16% in Q2 as customers, particularly in financial services, continued to pull back due to the worsening economy, inflation woes, and the continuing banking crisis. Customers continue to delay spending making forecasts even more uncertain. Revenues were also down sequentially for both businesses. The bright spots were improving gross margin due to utilization and an increase in booking for D&A. Bookings for the quarter were $10.1 million up $1.7 million from Q1 2023. While the company sees some improvement it has not been enough to consider it a trend. During the quarter started to buy back stock under its new program and purchased 62,000 shares. We expect further buybacks given the company’s healthy cash position and return on investment at these stock prices.
This quarter the company expand its staffing offering and on May 31st it began placing engineering talent with customers. While it only has a few people in the field so far, it is a source of additional revenue that utilizes the same recruiting staff and sales agents and has similar economics to IT staffing.
Mastech’s enterprise value is now under $101 million-- or 0.6 times EV/2023 Estimated Sales. Its peers at 1.9xs. On a PE basis, the stock trades at 13.4 times 2024 non-GAAP EPS. We have again lowered our 2023 outlook in consideration of the weakening global economy and Q2 results.
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