Did Tetra Tech Inc’s (NASDAQ:TTEK) Recent Earnings Growth Beat The Trend?
For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Tetra Tech Inc’s (NASDAQ:TTEK) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers. Check out our latest analysis for Tetra Tech
Were TTEK’s earnings stronger than its past performances and the industry?
I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to assess various companies in a uniform manner using the most relevant data points. For Tetra Tech, its most recent earnings (trailing twelve month) is $117.9M, which, against last year’s figure, has jumped up by 41.78%. Given that these figures are somewhat short-term, I’ve created an annualized five-year value for TTEK’s earnings, which stands at $74.8M. This means that, generally, Tetra Tech has been able to consistently grow its earnings over the last few years as well.
What’s enabled this growth? Let’s take a look at if it is solely attributable to industry tailwinds, or if Tetra Tech has experienced some company-specific growth. Over the past couple of years, Tetra Tech top-line expansion has outstripped earnings and the growth rate of expenses. Though this has led to a margin contraction, it has softened Tetra Tech’s earnings contraction. Looking at growth from a sector-level, the US commercial services industry has been growing, albeit, at a subdued single-digit rate of 6.67% in the previous year, and 8.88% over the past five years. This shows that whatever tailwind the industry is deriving benefit from, Tetra Tech is capable of amplifying this to its advantage.
What does this mean?
Tetra Tech’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Tetra Tech gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Tetra Tech to get a better picture of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for TTEK’s future growth? Take a look at our free research report of analyst consensus for TTEK’s outlook.
2. Financial Health: Is TTEK’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 01 October 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
