MHH: Mastech Digital Reports 2021 Revenue Growth of 14% to $222 Million Despite Pandemic Challenges

By Lisa Thompson

NYSE:MHH

READ THE FULL MHH RESEARCH REPORT

2021 was a year that Mastech MHH moved from pandemic-driven hesitation by clients and austerity measures, to end the year with business largely back to normal and a client base increasingly amenable to remote staffing. It showed revenue growth of 14% and non-GAAP earnings growth of 11%. We expect that growth to accelerate in 2022 given the company's record backlog, the resumption of projects by clients, and demand continuing to outstrip supply during The Great Resignation. Another positive for Mastech is that customers are more accepting of remote workers and the company has invested in India-based facilities that can provide customers with highly skilled IT professionals unable or unwilling to relocate. This offering should gain steam throughout 2022.

Both of Mastech's business segments showed year over year growth. In IT staffing, the company hired 199 net new billable consultants leading to rise in IT staffing revenues of 12% to $184 million. Data and Analytics revenues increased 27% to $38 million from 2020. Bookings for the year were $55 million.

On the acquisition front, the company has $50 million at its disposal and is looking for add-on services for its D&A business. First it must find someone to lead that business, as that hire would be in charge of any integration and strategic decisions.

We are tweaking estimates for 2022 with slightly lower revenues and slightly higher earnings. We are now looking for revenues $247 million and a non-GAAP EPS of $1.64 and for 2022. For 2023 we are starting at revenues of $270 million and $2.00 respectively. With a valuation well below its peers at 0.9 times EV to 2022 estimated revenues, this growth should propel the stock closer to parity with its peers at 2.6xs. Even on a PE basis the stock is inexpensive at only 11.2 times 2022 estimates.

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