NYSE:MHH
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On January 6th, Nirav Patel became President, Chief Executive Officer, and a member of Mastech Digital’s (NYSE:MHH) Board of Directors. He succeeds Vivek Gupta, who has led the company since 2016. Nirav brings over 20 years of experience as a technology executive with a proven track record of scaling multibillion-dollar businesses. Most recently, he was President and CEO of Bristlecone, a Mahindra Group company specializing in digital supply chain transformation. There, he transformed Bristlecone into the industry’s largest pure-play supply chain services provider and expanded its global workforce to over 3,000. He was also Senior Vice President and Global Markets Leader at Cognizant, where he grew the Communications, Media, and Technology business to over $2 billion in revenue. Nirav earned a BS in computer science from BIST, Madras University, and attended Harvard Business School’s Advanced Management Program.
According to filings, Mr. Patel will receive an annual base salary of $1 million and is eligible to earn an annual cash bonus of $500,000 to achieve certain financial and operational targets. He also receives a cash signing bonus of $2 million and 702,358 stock options with an exercise price equal to the stock’s closing price on January 6th ($15.41), which will vest over four years.
Mastech Digital Reported Improved Earnings and Margins in 2024
While revenues remained flattish in the 2024 year, margins improved to record levels, giving Mastech much higher gross and operating margins than in 2024. The company is now growing year over year in both revenues and earnings, and we expect results for 2025 to be much improved despite current customer uncertainty. For the year, revenue declined 1.1%, while non-GAAP net income and EPS grew over 62% due to improved margins. The company added 62 billable consultants in the year to reach 1,008.
D&A bookings grew to $11 million in Q4 compared to $11 million in Q3. This was below company expectations given its robust pipeline. The D&A segment reported year-over-year revenue growth of 7%. Staffing revenues declined 3%, but its margin increased to 23.2% from 21.7%. Total gross margin was again a record, and since D&A has room to improve, it could continue to grow.
Mastech’s enterprise value is now $120 million, up from $100 million in our last report. — or 0.5 times EV/2025 estimated Sales. The stock trades at 14.8 times 2025 non-GAAP EPS on a PE basis with expected EPS growth of 15%. If we say the stock is worth between 0.7 times EV to sales and a PE of 15 times, the stock price would average approximately $14.00 per share.
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