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Tetra Tech, Inc. (NASDAQ:TTEK) just released its quarterly report and things are looking bullish. Tetra Tech beat earnings, with revenues hitting US$605m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 19%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the consensus forecast from Tetra Tech's seven analysts is for revenues of US$2.43b in 2021, which would reflect a credible 3.9% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 3.5% to US$3.42. In the lead-up to this report, the analysts had been modelling revenues of US$2.43b and earnings per share (EPS) of US$3.42 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$142. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Tetra Tech analyst has a price target of US$166 per share, while the most pessimistic values it at US$98.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Tetra Tech shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Tetra Tech's revenue growth will slow down substantially, with revenues next year expected to grow 3.9%, compared to a historical growth rate of 6.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Tetra Tech is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$142, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Tetra Tech. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Tetra Tech going out to 2025, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 1 warning sign for Tetra Tech you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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