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Tetra Tech (TTEK) Surges 54% YTD: What's Driving the Stock?

Zacks Equity Research

Tetra Tech, Inc.’s TTEK price performance has been impressive so far in 2019, with shares having gained 55.3%. Solid financial performances and future growth opportunities have supported positive market sentiments for this stock.

The California-based company belongs to the Zacks Pollution Control industry. It currently carries a Zacks Rank #2 (Buy) and has a favorable VGM Score of B. Earnings in the next five years are predicted to rise 15.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, Tetra Tech has outshined its industry’s growth of 24.7%, the Zacks Industrial Products sector’s rally of 4% and the S&P 500’s improvement of 13%.




It is worth mentioning here that Tetra Tech has reported better-than-expected results for three quarters in a row so far in 2019. Average positive earnings beat for these three quarters (or the first three quarters of fiscal 2019, ending September) was 11.2%. Notably, earnings in the last reported quarter surpassed estimates by 11.25%.

Factors Driving the Stock

We believe that broader factors are playing role in Tetra Tech’s success. Pollution-related risks, stringent government regulations, and increasing demand in emerging nations are benefiting the industry players. Such tailwinds have placed the industry in top 37% (with the rank of 94) of more than 250 Zacks industries. Also, the industry’s current growth estimates for earnings is 13.27%, higher than the S&P 500’s 9.03%.

Narrowing down on company-specific factors, contract wins have played a vital role. Of late, the company has been awarded $132 million from U.S. Environmental Protection Agency, $70-million contract from the U.S. Agency for International Development and $46 million from the U.S. Army Corps of Engineers, Transatlantic Middle East District, among other contracts.

In addition, growing demand for disaster response and recovery planning as well as the broad-based infrastructure business has been aiding Tetra Tech. Also, services required for environmental programs, industrial water treatment, renewable energy and high-performance buildings have strengthened revenues.

Acquisitive nature of Tetra Tech has been boosting growth opportunities as well. The buyout of eGlobalTech in April 2019 has been strengthening the company’s business from commercial and government customers. Also, it added WYG plc — a provider of engineering and consulting services — to its portfolio in July. WYG is anticipated to enhance Tetra Tech’s businesses in the U.K. and Europe as well as in environment, water and infrastructure markets. Shareholder-friendly policies raised the stock’s attractiveness. Dividend payments and stock buybacks are popular ways of boosting stakeholders’ wealth.

Earnings estimates for the company have been raised in the past 60 days, reflecting positive sentiments about its growth prospects. Earnings estimates for the current year and the next year have grown 1.6% and 2.1% from the respective 60-day-ago figures.

Tetra Tech, Inc. Price and Consensus

 

Tetra Tech, Inc. Price and Consensus

Tetra Tech, Inc. price-consensus-chart | Tetra Tech, Inc. Quote

Tetra Tech’s Performance Versus Three Peers

Tetra Tech has outperformed many industry peers so far in 2019. Three such stocks are CECO Environmental Corp. CECE, Donaldson Company, Inc. DCI and Energy Recovery, Inc. ERII, with respective year-to-date gains of 1.9%, 7.9% and 36%.

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