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NYSE:MHH
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Despite reporting a 5.1% decline in revenues in Q2 2024, Mastech (NYSE:MHH) significantly grew profits and gross margin. In fact, Mastech reported record total gross margins and a non-GAAP EPS improvement of 75%. It also added 31 billable consultants in the quarter portending an even better Q3. It reached 1,035 billable consultants by the end of June and expects a few more adds this quarter.
D&A had another strong booking number at $9.2 million, similar to the $9.6 million reported for Q1 2024. The D&A segment reported year-over-year revenue growth after seven quarters of declines. Gross margins improved year over year and sequentially for both segments and reached a record for the company. We expect a sequential increase in revenues and earnings throughout 2024. Current customers have been increasing spending aided by four quarters of restraint increasing pent-up demand. Management is increasingly positive about the second half of the year and expected margins to hold above 25%.
Mastech’s enterprise value is now $76 million-- or 0.4 times EV/2024 Estimated Sales. Its peers trade at an average of 2.5xs. The stock trades at 11.1 times 2025 non-GAAP EPS on a PE basis.
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