WF vs. BEN: Which Stock Should Value Investors Buy Now?
Tetra Tech Inc TTEK has charted an impressive trajectory of late, with its shares having appreciated 20.3% in the last six months. In fact, Tetra Tech has outperformed the industry's rise by a wide margin, which has climbed 5%.
Tetra Tech’s prospects look quite robust. In its fiscal second-quarter earnings report, the company’s earnings and revenues comfortably beat the Zacks Consensus Estimate. The bottom line improved 12.5% on strong top-line growth, driven by a solid demand for the company’s high-end water, environment and infrastructure services. Tetra Tech’s backlog amounted to $2.51 billion in the quarter, which rose year over year on the back of strong orders in the federal, state and local markets.
Tetra Tech has had a solid run in recent times owing to its impressive revenue growth, restructuring efforts and accretive acquisitions. Benefiting from its business model, Tetra Tech remains bullish about its growth in all four client sectors — U.S. federal, U.S. state and local, the U.S. commercial work along with international.
In the last reported quarter, revenues in the U.S. state and local improved 26% year over year. This marked the seventh sequential quarter of double-digit growth by the same client. Also, net revenues in the U.S. commercial work increased 6% year over year, backed by commercial permitting, technical analysis and design work.
The budget for Department of Defense has recently been raised by $15 billion, providing the company with more opportunities. Also, early indications suggest that the budget may be raised again in 2018, which could mean a string of new task orders for upgrades, design projects and accelerated cleanups for Tetra Tech.
Tetra Tech secured orders across its international development businesses including new programs with the United States, Australian and the U.K. development agencies. The company also won new orders for recent contracts with the Federal Aviation Administration and the Department of Defense. The company also won a $40-million data analytics contract for the FAA, where it will design a state-of-the-art system for tracking medical records.
Going forward, we believe that Tetra Tech has a solid base for future growth, courtesy of strong backlog levels along with a robust pipeline with major government organizations fetching billion-dollar deals for the company.
Tetra Tech has had a decent earnings surprise history of late, having surpassed estimates thrice in the trailing four quarters, with an average of 7.6%.
The Zacks Rank #2 (Buy) company flaunts a Value Score of A. Further, Tetra Tech has been witnessing solid activity on the earnings estimate revision front, reflecting bullish analyst sentiment. In the past two months, the Zacks Consensus Estimate for fiscal 2018 earnings has trended up from $2.52 to $2.59, on the back of five upward estimate revisions versus one downward.
Other Stocks to Consider
A few other top-ranked stocks in the broader sector include Caterpillar, Inc CAT, Crown Holdings, Inc CCK and Terex Corporation TEX, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Caterpillar has a robust earnings surprise history with an average beat of 33.4%. The bottom line has surpassed estimates in each of the trailing four quarters.
Crown Holdings beat estimates twice in the trailing four quarters, with an average surprise of 4.8%.
Terex too boasts an impressive earnings history, having generated a positive beat of 352% over the trailing four quarters and exceeding estimates all through.
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