Reasons to Retain Tetra Tech (TTEK) Stock in Your Portfolio Now
Tetra Tech, Inc. TTEK benefits from its focus on providing high-end consulting, design and engineering services despite cost inflation and forex woes.
Let us discuss the reasons why investors should retain the stock for the time being.
Growth Catalysts
Business Strength: Tetra Tech is gaining from its diversified business structure, which helps mitigate the adverse impact of weakness in one end market with strength across the others. Higher U.S. state and local government activities related to digital water and U.S. federal programs are aiding the Government Services Group (GSG) segment. Increased activity on high-performance buildings, clean energy and international infrastructure are aiding the Commercial / International Services Group segment.
The company’s revenues increased 29.1%, year over year, in fiscal 2023 (ended Oct 1, 2023), driven by increased activity in the U.S. Federal, U.S. Commercial and International client sectors, and the RPS acquisition. A robust backlog level is also supporting TTEK. Tetra Tech’s backlog at the end of fiscal 2023 was $4,790.4 billion, up 28% year over year.
Accretive Acquisition: TTEK has been strengthening its business through acquisitions. The company completed the acquisition of RPS Group plc, an established technology-enabled consultancy firm, in January 2023. The acquisition enhanced Tetra Tech’s consultancy in water, environment and sustainable infrastructure, thus expanding its water practice in the United Kingdom and strengthening its foothold in renewable energy and environmental management.
Tetra Tech also acquired Reston, VA-based enterprise technology services, cybersecurity and management consulting firm, Amyx, Inc., in the same month. As a part of the Federal Information Technology division, the Amyx acquisition expands its use of advanced data analytics, cybersecurity, digital transformation and agile software development solutions for its government and commercial customers. Amyx is integrated into the company’s GSG segment. The company spent $854.3 million on acquisitions in fiscal 2023.
Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payment & share repurchases. In fiscal 2023, Tetra Tech paid out dividends of $52.1 million. Also, the quarterly dividend rate was hiked 13% in May 2023.
In light of the above-mentioned positives, we believe, investors should retain TTEK stock for now, as suggested by its current Zacks Rank #3 (Hold). Shares of the company rose 14.9% in a year compared with the industry‘s 1.9% increase.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Flowserve Corporation FLS presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
FLS delivered a trailing four-quarter average earnings surprise of 27.3%. In the past 60 days, the Zacks Consensus Estimate for Flowserve’s 2023 earnings has increased 1%. The stock has risen 34.3% in the past year.
Applied Industrial Technologies, Inc. AIT presently carries a Zacks Rank of 2. It has a trailing four-quarter average earnings surprise of 13.9%.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has increased 1.8% in the past 60 days. Shares of Applied Industrial have jumped 37.1% in the past year.
A. O. Smith Corporation AOS currently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 14%.
In the past 60 days, the Zacks Consensus Estimate for A. O. Smith’s 2023 earnings has improved approximately 1%. The stock has risen 44% in the past year.
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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
A. O. Smith Corporation (AOS) : Free Stock Analysis Report
Flowserve Corporation (FLS) : Free Stock Analysis Report
Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report
