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Here's Why Investors Should Bet on Tetra Tech (TTEK) Stock

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Zacks Equity Research
·3 min read
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Tetra Tech, Inc.TTEK has impressed investors with its recent growth momentum driven by strength in its client businesses and acquisitions.

Shares of this Zacks Rank #2 (Buy) company have gained 21.1% compared with the industry’s growth of 3.5% over the past year.

Factors to Consider

Tetra Tech is currently focusing on high-end consulting and engineering services that are helping it to promote high-value and high-margin business. For fiscal 2020 (ending September 2020), the company expects sales from the U.S. federal clients to grow 5-10%, backed by strong U.S. federal budget. Also, sales from the U.S. commercial clients are anticipated to increase 3-8%, benefiting from sustainable buildings and environmental services. Also, it expects the U.S. state and local sales to increase 10-15%, backed by strength in disaster recovering and municipal water infrastructure businesses. Notably, the company anticipates net revenues of $2.4-$2.6 billion for fiscal 2020 and $580-$630 million for the second quarter of fiscal 2020 (ending March 2020).

Also, the company completed the acquisition of WYG plc in July 2019. Notably, the buyout has been strengthening Tetra Tech’s global presence, especially in the U.K. and Europe, and business in environment, water and infrastructure markets. Also, the company’s buyout of eGlobalTech (in April 2019) has been strengthening its business for commercial and government customers.

Moreover, Tetra Tech remains highly committed toward increasing shareholders’ wealth through dividends and share repurchase programs. In this regard, it repurchased shares worth $21.2 million in the first quarter of fiscal 2020(ended Dec 29, 2019) and distributed dividends totaling $8.2 million. Notably, it also hiked quarterly dividend rate by 25% in April 2019.Further, in January 2020, the company received approval for a new $200-million share buyback program.

In addition, the company’s earnings estimates have been trending north over the past 60 days, with three upward estimate revisions for fiscal 2020. The Zacks Consensus Estimate for fiscal 2020 has been revised upward from $3.46 to $3.51. Also, the consensus estimate for fiscal 2021 (ending September 2021) has been revised upward from $3.72 to $3.80 over the same time frame.

Other Key Picks

Some other top-ranked stocks from the Zacks Industrial Products sector are Graco Inc. GGG, Sharps Compliance Corp SMED and Regal Beloit Corporation RBC. While Graco and Sharps Compliance sport a Zacks Rank #1 (Strong Buy), Regal Beloit carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Graco delivered positive earnings surprise of 0.40%, on average, in the trailing four quarters.

Sharps Compliance’s earnings surprise in the last reported quarter was 100.00%.

Regal Beloit’s earnings surprise in the last reported quarter was 0.81%.

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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
 
Regal Beloit Corporation (RBC) : Free Stock Analysis Report
 
Graco Inc. (GGG) : Free Stock Analysis Report
 
Sharps Compliance Corp (SMED) : Free Stock Analysis Report
 
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