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Tetra Tech Down to Strong Sell on Downward Estimate Revision

Zacks Equity Research

Zacks Investment Research downgraded Tetra Tech Inc. (TTEK) to a Zacks Rank #5 (Strong Sell) on Aug 21.

Why the Downgrade?

Tetra Tech has been witnessing downward estimate revisions since it reported lower-than-expected third-quarter 2014 results on Jul 30. Quarterly earnings of 41 cents per share came a penny below the Zacks Consensus Estimate.

The ongoing weakness in its Remediation and Construction Management (:RCM) segment proved to be a drag on the company’s financials in the quarter. The business being impacted by the unfavorable conditions in the construction market is awaiting an operational evaluation aimed at reducing risks and augmenting margins.

Expecting the slump to persist until a transformation process is initiated, Tetra Tech lowered its guidance for both earnings and revenues in 2014. For fiscal 2014, the company expects earnings per share in the range of $1.61–$1.71 as compared with the prior projection of $1.75–$1.85. Meanwhile, revenues, net of subcontractor costs, are expected in the $1.85–$1.9 billion band, down from $1.9–$2.0 billion forecasted earlier.

All these negatives triggered a downtrend in the Zacks Consensus Estimate for earnings which declined 8.3% for 2014 to $1.65 per share over the last 30 days. Further, for 2015, the same dipped 14.2% to $1.69 per share.

Other Stocks to Consider

Some other better-ranked stocks worth a look in the same sector include Blount International Inc. (BLT), Fuel-Tech, Inc. (FTEK) and Sharps Compliance Corp. (SMED). While Blount International sports a Zacks Rank #1 (Strong Buy), Fuel-Tech and Sharps Compliance carry a Zacks Rank #2 (Buy).

Read the Full Research Report on TTEK
Read the Full Research Report on FTEK
Read the Full Research Report on SMED
Read the Full Research Report on BLT

Zacks Investment Research