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It's been a good week for Tetra Tech, Inc. (NASDAQ:TTEK) shareholders, because the company has just released its latest annual results, and the shares gained 3.1% to US$117. It was a credible result overall, with revenues of US$2.3b and statutory earnings per share of US$3.16 both in line with analyst estimates, showing that Tetra Tech is executing in line with expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Tetra Tech after the latest results.
Taking into account the latest results, the most recent consensus for Tetra Tech from six analysts is for revenues of US$2.44b in 2021 which, if met, would be a reasonable 3.8% increase on its sales over the past 12 months. Statutory earnings per share are predicted to accumulate 6.6% to US$3.42. In the lead-up to this report, the analysts had been modelling revenues of US$2.44b and earnings per share (EPS) of US$3.42 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
The consensus price target rose 19% to US$124despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Tetra Tech's earnings by assigning a price premium. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Tetra Tech, with the most bullish analyst valuing it at US$144 and the most bearish at US$21.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Tetra Tech's revenue growth is expected to slow, with forecast 3.8% increase next year well below the historical 7.0%p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.3% 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 obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Tetra Tech's revenues are expected to perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Tetra Tech going out to 2023, and you can see them free on our platform here..
And what about risks? Every company has them, and we've spotted 2 warning signs 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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