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Tetra Tech (TTEK)
NASDAQ:TTEK
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Tetra Tech
(NASDAQ:TTEK)
Rating:71Outperform
Price Target:
$39.00
▲( 10.01% Upside)
Positive Factors
Acquisitions
TTEK announced acquisitions to increase work in the life science and public sectors in Europe and automation solutions in municipal water and industrial sectors.
Earnings
TTEK reported F2Q25 results above expectations due to disaster response work related to California fires and remaining hurricane damage remediation work in the Southeast U.S.
Financial Performance
Net revenue exceeded the consensus forecast and the high end of the guidance range, showcasing strong business performance.
Negative Factors
Federal Contracts
Canceled U.S. federal government contracts, particularly for USAID projects, led to a 20.8% decline in backlog.
Legal Issues
A $150 million accrual to settle legal disputes regarding former soil remediation work affected TTEK's GAAP EPS.
Revenue Impact
The U.S. Agency of International Development (USAID) work accounted for 13.0% of Tetra Tech's revenue, and announced administrative leave for most employees, impacting future revenue.
Tetra Tech (TTEK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.34B
Dividend Yield0.65%
Average Volume (3M)2.19M
Price to Earnings (P/E)51.1
Beta (1Y)0.53
Revenue Growth10.35%
EPS Growth-29.34%
CountryUS
Employees30,000
SectorIndustrials
Sector Strength90
IndustryEngineering & Construction
Share Statistics
EPS (TTM)0.33
Shares Outstanding263,502,620
10 Day Avg. Volume3,118,736
30 Day Avg. Volume2,188,536
Financial Highlights & Ratios
PEG Ratio-2.67
Price to Book (P/B)5.61
Price to Sales (P/S)0.00
P/FCF Ratio27.58
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue0.50
Enterprise Value/Gross Profit11.52
Enterprise Value/Ebitda4.78
Forecast
1Y Price Target
$40.33Price Target Upside13.77% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Tetra Tech Business Overview & Revenue Model
Company DescriptionTetra Tech, Inc. (TTEK) is a leading provider of consulting and engineering services, focusing on water, environment, infrastructure, resource management, and energy sectors. The company offers a wide range of services, including engineering design, environmental assessments, data analytics, and project management, serving both public and private sector clients globally. Headquartered in Pasadena, California, Tetra Tech leverages its technical expertise and innovative solutions to address complex challenges and advance sustainable development.
How the Company Makes MoneyTetra Tech generates revenue primarily through its consulting and engineering services, which are delivered under contract to a diverse client base, including government agencies, commercial entities, and industrial clients. The company's key revenue streams include project-based contracts for services such as environmental consulting, infrastructure design, water management solutions, and renewable energy projects. Tetra Tech often engages in long-term contracts, which provide a steady flow of income. Additionally, strategic partnerships and joint ventures with other firms enhance its service offerings and market reach. Government contracts, especially in the environmental and infrastructure sectors, are significant contributors to its revenue, given the company's strong reputation and expertise in these areas.
Tetra Tech Financial Statement Overview
Summary
Tetra Tech exhibits strong financial health across income, balance sheet, and cash flow statements. The company has shown consistent revenue growth and profitability, supported by effective cost management and operational efficiency. The balance sheet presents a sound financial structure with balanced leverage and good equity utilization. Solid cash flow generation indicates effective cash management, supporting ongoing growth and investment opportunities. Monitoring leverage levels will be essential to maintain financial flexibility.Income Statement
The income statement shows strong financial performance with a consistent increase in total revenue over the years, highlighting a positive revenue growth trajectory. The gross profit margin for TTM is approximately 16.65%, and the net profit margin is around 5.35%, indicating stable profitability. The company has maintained solid EBIT and EBITDA margins at 7.65% and 8.83% respectively for TTM, underscoring effective cost management and operational efficiency.85
Very Positive
Balance Sheet
The balance sheet reflects a robust financial position with a moderate debt-to-equity ratio of approximately 0.64 for TTM, which suggests a balanced capital structure. The equity ratio is about 40.48%, indicating a healthy level of equity backing the company's assets. Return on equity (ROE) stands at 17.03%, demonstrating effective utilization of shareholders' equity to generate profits.78
Positive
Cash Flow
The cash flow statement reveals a solid cash generation capability, with a stable operating cash flow to net income ratio of 1.26 for TTM, indicating efficient conversion of profits into cash. The free cash flow to net income ratio is 1.20, reflecting robust free cash flow generation. The company has shown consistent growth in free cash flow over the years, highlighting strong cash management.80
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 5.39B | 5.20B | 4.52B | 3.50B | 3.21B | 2.99B | Gross Profit |
| 897.42M | 866.44M | 725.03M | 575.56M | 498.40M | 446.54M | EBIT |
| 412.18M | 500.74M | 358.11M | 340.45M | 278.70M | 241.09M | EBITDA |
| 492.14M | 584.09M | 481.23M | 368.01M | 299.23M | 263.04M | Net Income Common Stockholders |
| 259.16M | 333.38M | 273.42M | 263.13M | 232.81M | 173.86M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 210.29M | 232.69M | 168.83M | 185.09M | 166.57M | 157.51M | Total Assets |
| 4.07B | 4.19B | 3.82B | 2.62B | 2.58B | 2.38B | Total Debt |
| 1.16B | 1.02B | 1.09B | 462.90M | 454.24M | 553.26M | Net Debt |
| 950.89M | 783.46M | 920.39M | 277.81M | 287.67M | 395.75M | Total Liabilities |
| 2.49B | 2.36B | 2.42B | 1.44B | 1.34B | 1.34B | Stockholders Equity |
| 1.58B | 1.83B | 1.40B | 1.18B | 1.23B | 1.04B |
| Cash Flow | Free Cash Flow | ||||
| 344.41M | 340.57M | 341.56M | 325.61M | 295.80M | 250.23M | Operating Cash Flow |
| 362.52M | 358.71M | 368.46M | 336.19M | 304.37M | 262.48M | Investing Cash Flow |
| -111.04M | -111.04M | -771.20M | -55.74M | -92.99M | -63.02M | Financing Cash Flow |
| -190.38M | -191.38M | 382.38M | -249.61M | -210.10M | -163.05M |
Tetra Tech Technical Analysis
Positive
35.45
Price Trends
31.13
Positive
33.06
Positive
39.27
Negative
Market Momentum
1.36
Negative
71.35
Negative
68.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TTEK, the sentiment is Positive. The current price of 35.45 is above the 20-day moving average (MA) of 33.33, above the 50-day MA of 31.13, and below the 200-day MA of 39.27, indicating a neutral trend. The MACD of 1.36 indicates Negative momentum. The RSI at 71.35 is Negative, neither overbought nor oversold. The STOCH value of 68.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TTEK.
Tetra Tech Risk Analysis
Tetra Tech disclosed 53 risk factors in its most recent earnings report. Tetra Tech reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tetra Tech Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $1.45B | 45.25 | 3.79% | ― | 8.65% | -22.72% | |
77 Outperform | $14.21B | 23.42 | 28.07% | 0.89% | 4.55% | ― | |
74 Outperform | $7.18B | 18.49 | 28.18% | 1.18% | 12.84% | ― | |
73 Outperform | $6.19B | 3.60 | 66.58% | ― | 7.16% | 523.56% | |
72 Outperform | $15.39B | 35.34 | 8.46% | 0.94% | -22.81% | -30.13% | |
71 Outperform | $9.34B | 51.05 | 11.91% | 0.65% | 10.35% | -29.34% | |
64 Neutral | $4.39B | 11.81 | 5.17% | 249.38% | 3.98% | -12.17% |
* Industrials Sector Average
Performance Comparison
TTEK
Tetra Tech
35.45
-7.93
-18.28%
ACM
Aecom Technology
107.37
19.25
21.85%
FLR
Fluor
41.04
-0.92
-2.19%
J
Jacobs Solutions
126.81
11.45
9.93%
KBR
KBR
52.34
-13.33
-20.30%
NVEE
NV5 Holdings
22.16
-1.84
-7.67%
Tetra Tech Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q2-2025)
| % Change Since: 14.80%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
Despite the significant loss of its largest client, Tetra Tech reported record revenue and earnings, driven by strong performance across other segments and geographic diversification. The acquisition of SAGE and Carron + Walsh positions the company for future growth. However, challenges remain in the Australian market and with cash flow management due to USAID-related issues.Q2-2025 Updates
Positive Updates
Record Revenue and Earnings
Tetra Tech reported one of the highest quarterly revenues in its history, with net revenue increasing to $1.1 billion, up by $51 million compared to the same quarter last year. Operating income was $130 million, up 11% from the previous year, and earnings per share increased by 18% to $0.33.
Strong Performance in Government Services Group
The Government Services Group (GSG) segment saw a 12% year-over-year revenue increase to $521 million, with a margin of 13.8%.
U.S. Federal and State & Local Growth
Revenue from U.S. federal clients increased by 16%, with notable contributions from disaster response activities and Department of Defense projects. State and local revenues grew by 44% year-over-year.
International Expansion and Acquisitions
Tetra Tech expanded its international footprint with the acquisition of Carron + Walsh in Ireland and SAGE Group in Australia, enhancing its capabilities in program management and digital systems.
Increased Dividend and Stock Buyback Program
The Board approved a 12% increase in the quarterly dividend and announced an additional $500 million for stock buybacks.
Negative Updates
Loss of Largest Client
Tetra Tech's largest client by revenue, USAID and the Department of State, essentially disappeared within one quarter, resulting in a de-obligation of approximately $1.1 billion in projects.
Challenges in Australian Market
Revenue in Australia experienced a 10% reduction due to slowed infrastructure work, attributed to a national election that delayed many funding programs.
Cash Flow and Working Capital Impact
The pause in payments from USAID negatively affected working capital, although subsequent payments helped improve the situation.
Company Guidance
In the Tetra Tech earnings call for the second quarter of fiscal year 2025, CEO Dan Batrack highlighted the company's robust performance despite the unexpected loss of their largest client by revenue. The quarter saw record results in several metrics, including net revenue of $1.1 billion, a $51 million increase from the previous year, operating income of $130 million, up 11%, and earnings per share (EPS) of $0.33, reflecting an 18% growth. The Government Services Group (GSG) segment reported a 12% revenue increase to $521 million, with a 13.8% margin. Meanwhile, the Commercial/International Group (CIG) segment maintained a 13.2% margin with $597 million in revenue. Tetra Tech's backlog stood at $4.31 billion, with a book-to-bill ratio of 1.1x. The company continues to expand its contract capacity, now holding over $30 billion in U.S. federal government capacity, and has recently enhanced its capabilities with acquisitions like Carron + Walsh and the SAGE Group. Looking ahead, Tetra Tech provided guidance for the third quarter, projecting net revenue of $1.1 to $1.2 billion and an adjusted EPS of $0.35 to $0.40, while raising the lower end of its annual revenue guidance to $4.4 to $4.765 billion with an EPS of $1.42 to $1.52.Tetra Tech Corporate Events
Private Placements and FinancingStock BuybackDividendsBusiness Operations and StrategyFinancial Disclosures
Tetra Tech Enhances Credit Agreement and Raises Dividend
Positive
May 7, 2025
On May 5, 2025, Tetra Tech entered a Fourth Amended and Restated Credit Agreement, enhancing its financial flexibility with a $1.5 billion borrowing capacity. This agreement includes a $250 million senior secured term loan facility and a $600 million revolving credit facility, with provisions for additional commitments. Tetra Tech also reported strong second-quarter results with record revenues and net income, despite challenges from the reorganization of USAID. The company increased its quarterly dividend by 12% and expanded its stock buyback program by $500 million, reflecting confidence in its financial position and growth prospects. Additionally, Tetra Tech announced strategic acquisitions to expand its global digital technology and program management businesses, raising its FY25 guidance for net revenue and EPS.
Executive/Board ChangesShareholder Meetings
Tetra Tech Holds Annual Stockholders Meeting 2025
Neutral
Feb 28, 2025
On February 27, 2025, Tetra Tech held its annual meeting of stockholders to address several key issues. The meeting included the election of six board members, approval of executive compensation, and ratification of PricewaterhouseCoopers LLP as the independent accounting firm for fiscal 2025. The outcomes of these votes are significant for the company’s governance and financial oversight, impacting its strategic direction and stakeholder confidence.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.