On Apr 8, 2013, the California-based consulting, engineering and technical service provider company Tetra Tech Inc. (TTEK) revealed its lower earnings expectation for the second half of fiscal 2013. The primary reason behind this projection is the company’s poor performance in Eastern Canada.
Earlier, Tetra Tech estimated its revenue to be in the range of $500 million to $550 million for the second quarter net of subcontractor cost. Although the company reaffirmed this guidance, it anticipates a lower figure for the second half of the year. On the whole, the weak business in the Canadian regions and poor performance in the mining segment are expected to impact the operating income by $20 to $30 million.
Tetra Tech derives a major portion of its revenue from U.S. federal government agencies. The current economic condition is largely responsible for reduction in revenue from the U.S. federal government. Moreover, a delay in the U.S. government’s budget process and a deficit budget impacted procurement of its services and have left an adverse impact on its future revenues. In addition, there has been an ongoing government investigation into corruption charges pertaining to the political sphere in Quebec. This is also delaying the company’s revenue recovery process and adversely affecting its results.
This news caused had its strong adverse impact on the company’s share price. In trading on Tuesday, shares of Tetra Tech, fell below its 200 day moving average of $27.13, by 6.8% to as low as $26.35 per share. Tetra Tech currently has a Zacks Rank #3 (Hold). Other companies in the industry that are worth considering include Calgon Carbon Corporation(CCC), CECO Environmental Corp. (CECE) and Fuel-Tech, Inc. (FTEK), all having a Zacks Rank #2 (Buy).
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