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Tetra Tech Wins $150M Contract From U.S. Naval Facilities

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Zacks Equity Research
·4 min read
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Tetra Tech, Inc. TTEK yesterday communicated about securing a contract from the U.S. Naval Facilities Engineering Command for providing architect and engineering services. The multiple-award contract has been valued at $150 million.

Per the contract, fire protection, fuel storage and distribution, spill containment, and emergency backup power systems at the U.S. Navy’s facilities worldwide will be modernized by Tetra Tech. The company is likely to leverage its advanced analytics and technology to fulfill the contract requirements and also support sustainable infrastructure measures of the U.S. Navy.

We believe that the aforementioned contract will help Tetra Tech to strengthen its existing business with the federal agency. Notably, the company’s shares gained 1.3% yesterday, ending the trading session at $125.19.

Order wins, especially from the U.S. federal government agencies or related institutions, are likely to benefit Tetra Tech in the quarters ahead. At the end of the fourth quarter of fiscal 2020 (ended Sep 27, 2020), the company had a solid backlog of $3,239.3 million, reflecting growth of 5.6% from the third quarter of fiscal 2020.

Of several contracts, Tetra Tech secured a $209-million environmental services contract from the U.S. Army Corps of Engineers (“USACE”) in October 2020. In the same month, the company received a $24-million contract from the U.S. Agency for International Development (“USAID”) for the management of water resources.

In September 2020, the company received a $68-million contract from the U.S. Environmental Protection Agency (“EPA”) for providing extensive scientific and technical support services.

For fiscal 2021 (ending September 2021), Tetra Tech anticipates net revenues from the U.S. federal clients to grow 5%. The upside is likely to be driven by enhanced analytics used in the water and environmental programs.

Zacks Rank, Price Performance and Earnings Estimates

Tetra Tech, with a $6.7-billion market capitalization, currently carries a Zacks Rank #4 (Sell). A diversified business structure, healthy backlog level and sound business from federal clients are likely to aid the company’s performance. However, the pandemic’s impact on its international business, especially in the U.K. and Australia, might play spoilsport.

In the past three months, Tetra Tech’s share price has increased 30.5% compared with the industry’s growth of 15.9%.


In the past 30 days, the company’s earnings estimates for the first quarter of fiscal 2021 (ending December 2020) have been lowered by 1.2% to 81 cents per share. Also, during the same timeframe, the consensus estimate for fiscal 2021 (ending September 2021) decreased 0.3% to $3.37, while that for fiscal 2022 (ending September 2022) has been stable at $3.77.

Tetra Tech, Inc. Price and Consensus


Tetra Tech, Inc. Price and Consensus
Tetra Tech, Inc. Price and Consensus

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

Stocks to Consider

Some better-ranked stocks in the industry are Donaldson Company, Inc. DCI, Energy Recovery, Inc. ERII and HeritageCrystal Clean, Inc. HCCI. All these stocks currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, earnings estimates for Donaldson have been stable, while improved for Energy Recovery and HeritageCrystal Clean. Further, the positive earnings surprise for the last reported quarter was 13.64% for Donaldson, 233.33% for Energy Recovery and 220% for HeritageCrystal Clean.

Zacks Names “Single Best Pick to Double”

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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

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