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Tetra Tech (TTEK)
NASDAQ:TTEK
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Tetra Tech
(NASDAQ:TTEK)71Outperform
Positive Factors
Financial Performance
TTEK's F1Q25 net revenue was up 17.9% year over year, surpassing both forecast and consensus estimates.
Growth Opportunities
Tetra Tech may offset pressure from reduced U.S. federal government work by completing more acquisitions and assisting with disaster recovery efforts around Los Angeles.
Negative Factors
Revenue Impact
The U.S. Agency of International Development (USAID) work accounted for 13.0% of Tetra Tech's revenue, and announced administrative leave for most employees, impacting future revenue.
Tetra Tech (TTEK) vs. S&P 500 (SPY)
Market Cap
$7.81B
Dividend Yield0.8%
Average Volume (3M)4.14M
Price to Earnings (P/E)30.4
Beta (1Y)0.85
Revenue Growth11.02%
EPS Growth11.33%
CountryUS
Employees30,000
SectorIndustrials
Sector Strength66
IndustryConstruction
Share Statistics
EPS (TTM)0.96
Shares Outstanding268,036,070
10 Day Avg. Volume3,108,661
30 Day Avg. Volume4,135,581
Financial Highlights & Ratios
PEG Ratio2.68
Price to Book (P/B)N/A
Price to Sales (P/S)1.65
Price to Cash Flow (P/CF)145.00
P/FCF Ratio145.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$42.67Price Target Upside47.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
Tetra Tech Business Overview & Revenue Model
Company DescriptionTetra Tech, Inc. engages in the provision of consulting and engineering services. It operates through the following segments: Government Services Group (GSG); Commercial and International Services Group (CIG); and Remediation and Construction Management (RCM). The GSG segment offers consulting and engineering services primarily to United States government clients such as federal, state and local, and development agencies worldwide. The CIG segment includes infrastructure and related environmental and geotechnical services, testing, engineering, and project management services to commercial and local government clients across Canada. The RCM segment focuses on the results of the wind-down of its non-core construction activities. The company was founded in 1966 and is headquartered in Pasadena, CA.
How the Company Makes MoneyTetra Tech generates revenue primarily through its consulting and engineering services, which are delivered under contract to a diverse client base, including government agencies, commercial entities, and industrial clients. The company's key revenue streams include project-based contracts for services such as environmental consulting, infrastructure design, water management solutions, and renewable energy projects. Tetra Tech often engages in long-term contracts, which provide a steady flow of income. Additionally, strategic partnerships and joint ventures with other firms enhance its service offerings and market reach. Government contracts, especially in the environmental and infrastructure sectors, are significant contributors to its revenue, given the company's strong reputation and expertise in these areas.
Tetra Tech Financial Statement Overview
Summary
Tetra Tech exhibits strong financial health across income, balance sheet, and cash flow statements. Revenue growth and profitability are consistent, supported by effective cost management and operational efficiency. The balance sheet shows a sound financial structure with balanced leverage and good equity utilization. Solid cash flow generation supports ongoing growth and investment opportunities.Income Statement
The income statement shows strong financial performance with a consistent increase in total revenue over the years, highlighting a positive revenue growth trajectory. The gross profit margin for TTM is approximately 16.65%, and the net profit margin is around 5.35%, indicating stable profitability. The company has maintained solid EBIT and EBITDA margins at 7.65% and 8.83% respectively for TTM, underscoring effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The balance sheet reflects a robust financial position with a moderate debt-to-equity ratio of approximately 0.64 for TTM, which suggests a balanced capital structure. The equity ratio is about 40.48%, indicating a healthy level of equity backing the company's assets. Return on equity (ROE) stands at 17.03%, demonstrating effective utilization of shareholders' equity to generate profits.78
Positive
Cash Flow
The cash flow statement reveals a solid cash generation capability, with a stable operating cash flow to net income ratio of 1.26 for TTM, indicating efficient conversion of profits into cash. The free cash flow to net income ratio is 1.20, reflecting robust free cash flow generation. The company has shown consistent growth in free cash flow over the years, highlighting strong cash management.80
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.39B | 5.20B | 4.52B | 3.50B | 3.21B | 2.99B | Gross Profit |
| 897.42M | 866.44M | 725.03M | 575.56M | 498.40M | 446.54M | EBIT |
| 412.18M | 500.74M | 358.11M | 340.45M | 278.70M | 241.09M | EBITDA |
| 476.08M | 584.09M | 481.23M | 368.01M | 299.23M | 263.04M | Net Income Common Stockholders |
| 259.16M | 333.38M | 273.42M | 263.13M | 232.81M | 173.86M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 168.83M | 232.69M | 168.83M | 185.09M | 166.57M | 157.51M | Total Assets |
| 3.83B | 4.19B | 3.82B | 2.62B | 2.58B | 2.38B | Total Debt |
| 1.09B | 1.02B | 1.09B | 462.90M | 454.24M | 553.26M | Net Debt |
| 920.39M | 783.46M | 920.39M | 277.81M | 287.67M | 395.75M | Total Liabilities |
| 2.42B | 2.36B | 2.42B | 1.44B | 1.34B | 1.34B | Stockholders Equity |
| 1.40B | 1.83B | 1.40B | 1.18B | 1.23B | 1.04B |
| Cash Flow | Free Cash Flow | ||||
| 344.41M | 340.57M | 341.56M | 325.61M | 295.80M | 250.23M | Operating Cash Flow |
| 362.52M | 358.71M | 368.46M | 336.19M | 304.37M | 262.48M | Investing Cash Flow |
| -111.04M | -111.04M | -771.20M | -55.74M | -92.99M | -63.02M | Financing Cash Flow |
| -190.38M | -191.38M | 382.38M | -249.61M | -210.10M | -163.05M |
Tetra Tech Technical Analysis
Negative
28.94
Price Trends
36.05
Negative
40.61
Negative
42.24
Negative
Market Momentum
-2.15
Negative
22.98
Positive
24.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TTEK, the sentiment is Negative. The current price of 28.94 is below the 20-day moving average (MA) of 30.76, below the 50-day MA of 36.05, and below the 200-day MA of 42.24, indicating a bearish trend. The MACD of -2.15 indicates Negative momentum. The RSI at 22.98 is Positive, neither overbought nor oversold. The STOCH value of 24.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TTEK.
Tetra Tech Risk Analysis
Tetra Tech disclosed 53 risk factors in its most recent earnings report. Tetra Tech reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tetra Tech Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $6.53B | 17.68 | 26.45% | 1.22% | 11.30% | ― | |
72 Outperform | $6.06B | 3.04 | 72.85% | ― | 5.43% | 2094.12% | |
71 Outperform | $7.81B | 30.41 | 15.32% | 0.80% | 11.02% | 11.33% | |
62 Neutral | $15.04B | 25.28 | 14.66% | 0.95% | -13.76% | -13.39% | |
62 Neutral | $8.11B | 13.34 | 1.17% | 3.02% | 4.16% | -15.14% | |
61 Neutral | $4.44B | 19.33 | 18.84% | ― | 12.61% | 7.43% |
* Industrials Sector Average
Performance Comparison
TTEK
Tetra Tech
28.94
-7.65
-20.91%
DY
Dycom
153.89
19.34
14.37%
FLR
Fluor
37.06
0.38
1.04%
J
Jacobs Solutions
124.37
2.75
2.26%
KBR
KBR
50.17
-10.95
-17.92%
STN
Stantec
83.30
1.36
1.66%
Tetra Tech Earnings Call Summary
Earnings Call Date: Jan 29, 2025 | % Change Since: -23.03% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted record-breaking revenue and profitability, strong backlog growth, and balanced revenue streams across segments. However, the impact of recent natural disasters, USAID contract halts, and a significant litigation settlement were notable challenges. The sentiment reflects a cautiously optimistic outlook despite some immediate hurdles.Highlights
Record Revenue and Profitability
Net revenue increased to $1.2 billion, up 18% from the prior year, marking an all-time record for any quarter in the company's history. Operating income was $138 million, up 24% from the prior year, with earnings per share increasing by 25% over the previous year to $0.35.
Strong Backlog Growth
The backlog grew to $5.44 billion, up 15% from the first quarter of last year, indicating strong future demand for services.
Government Services Group (GSG) Performance
GSG segment revenue increased by 36% year-over-year to $601 million, marking the first quarter with GSG revenue over $600 million. The segment achieved a 13.9% margin.
Balanced Revenue Streams
The Commercial International Group (CIG) segment delivered a 13% margin, with net revenue of $596 million, up 4% year-on-year, showcasing a balanced revenue stream between GSG and CIG segments.
Strong Federal and State & Local Revenue Growth
U.S. federal client revenue was up 32% from the same quarter last year, and state and local revenues increased by 47% year-over-year.
Lowlights
Impact of Natural Disasters
January was marked by destructive fires near the corporate headquarters, resulting in personal losses for staff members and evacuations.
USAID Contract Halt
Foreign development contracts, primarily for USAID, were put on hold for up to 90 days due to a new administration review, posing potential risks for revenue continuity.
Settlement of Litigation
One of the subsidiaries decided to settle litigation, resulting in a one-time material charge impacting first-quarter earnings.
Company Guidance
During Tetra Tech's first quarter fiscal year 2025 earnings call, the company reported record results, with net revenue reaching an unprecedented $1.2 billion, marking an 18% increase from the previous year. Operating income rose by 24% to $138 million, while earnings per share increased by 25% to $0.35, surpassing both the company's guidance range and market consensus. The company's backlog also grew to a new high of $5.44 billion, up 15% year-over-year. The Government Services Group (GSG) experienced a 36% rise in revenue, reaching $601 million, driven by projects in Ukraine. The Commercial International Group (CIG) segment saw a 13% margin with $596 million in net revenue, up 4% from the previous year. Despite challenges such as temporary holds on USAID contracts due to policy reviews by the new administration, Tetra Tech's diverse portfolio and adaptability suggest continued strong performance. The company also announced an increased quarterly dividend of $0.058 and continued to maintain a strong balance sheet with leverage at 1.33 times net debt to EBITDA.Tetra Tech Corporate Events
Executive/Board ChangesShareholder Meetings
Tetra Tech Holds Annual Stockholders Meeting 2025
Neutral
Feb 28, 2025
On February 27, 2025, Tetra Tech held its annual meeting of stockholders to address several key issues. The meeting included the election of six board members, approval of executive compensation, and ratification of PricewaterhouseCoopers LLP as the independent accounting firm for fiscal 2025. The outcomes of these votes are significant for the company’s governance and financial oversight, impacting its strategic direction and stakeholder confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.