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Tetra Tech (TTEK)
NASDAQ:TTEK
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Tetra Tech
(NASDAQ:TTEK)
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Rating:73Outperform
Price Target:
$40.00
▲(20.01% Upside)
Tetra Tech's strong financial performance and positive earnings call results are the primary drivers of its stock score. However, the high P/E ratio suggests potential overvaluation, and technical indicators show a neutral trend. Challenges in specific sectors and markets also temper the overall outlook.
Positive Factors
Strong Government Services Performance
The significant growth in government services highlights Tetra Tech's strong market position and ability to secure substantial contracts, ensuring a stable revenue stream and reinforcing its competitive advantage in the public sector.
Significant Federal Contract Wins
Securing large federal contracts enhances Tetra Tech's revenue visibility and strengthens its long-term growth prospects, providing a robust pipeline of projects and reinforcing its leadership in government consulting services.
Improved Cash Flow and Debt Leverage
The improvement in cash flow and reduced debt leverage indicates strong financial health, providing Tetra Tech with greater flexibility to invest in growth opportunities and withstand economic fluctuations.
Negative Factors
Decline in U.S. Commercial and Renewable Energy Work
The decline in commercial and renewable energy sectors suggests challenges in diversifying revenue streams and adapting to market changes, potentially impacting Tetra Tech's growth in these areas.
Challenges in Australian Market
The decrease in Australian market revenues indicates potential difficulties in maintaining international growth, which could affect Tetra Tech's global expansion strategy and revenue diversification.
Impact of Federal Government Changes on Backlog
Slower conversion of federal contracts due to government changes may hinder backlog growth, affecting Tetra Tech's ability to execute and expand its project pipeline efficiently.
Tetra Tech (TTEK) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.76B
Dividend Yield0.74%
Average Volume (3M)2.13M
Price to Earnings (P/E)41.0
Beta (1Y)0.46
Revenue Growth7.91%
EPS Growth-25.17%
CountryUS
Employees30,000
SectorIndustrials
Sector Strength72
IndustryEngineering & Construction
Share Statistics
EPS (TTM)0.43
Shares Outstanding262,773,400
10 Day Avg. Volume2,300,102
30 Day Avg. Volume2,133,599
Financial Highlights & Ratios
PEG Ratio1.77
Price to Book (P/B)6.89
Price to Sales (P/S)2.43
P/FCF Ratio37.02
Enterprise Value/Market Cap1.17
Enterprise Value/Revenue1.87
Enterprise Value/Gross Profit11.01
Enterprise Value/Ebitda23.43
Forecast
1Y Price Target
$43.67Price Target Upside31.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Tetra Tech Business Overview & Revenue Model
Company DescriptionTetra Tech, Inc. provides consulting and engineering services worldwide. The company operates through two segments Government Services Group (GSG) and Commercial/International Services Group (CIG). The GSG segment offers early data collection and monitoring, data analysis and information management, science and engineering applied research, engineering design, project management, and operations and maintenance services; and climate change and energy management consulting, as well as greenhouse gas inventory assessment, certification, reduction, and management services. This segment serves federal, state, and local governments, and development agencies in water resources analysis and water management, environmental monitoring, data analytics, government consulting, waste management, and a range of civil infrastructure master planning and engineering design markets. The CIG segment provides early data collection and monitoring, data analysis and information management, feasibility studies and assessments, science and engineering applied research, engineering design, project management, and operations and maintenance services. This segment serves natural resources, energy, and utilities markets, as well as sustainable infrastructure master planning and engineering design markets. Tetra Tech, Inc. was founded in 1966 and is headquartered in Pasadena, California.
How the Company Makes MoneyTetra Tech generates revenue primarily through its consulting and engineering services, which are billed on a project basis or through long-term contracts with government and commercial clients. Key revenue streams include environmental services, water management solutions, and energy-related consulting. The company also benefits from significant partnerships with various government agencies, private firms, and international organizations, enabling it to secure large-scale contracts and projects. Additionally, Tetra Tech capitalizes on emerging trends in sustainability and climate change adaptation, positioning itself to leverage increased demand for its expertise in these areas.
Tetra Tech Earnings Call Summary
Earnings Call Date:Jul 30, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Nov 12, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Tetra Tech's record-breaking financial performance, strong growth in government services, and promising prospects in digital automation. However, challenges were noted in the U.S. commercial sector, particularly in renewable energy, and in the Australian market. The impact of federal government changes on backlog conversion was also a concern.Q3-2025 Updates
Positive Updates
Record-Breaking Operating Income and EPS
Tetra Tech achieved all-time highs for operating income and earnings per share (EPS), not just for the third quarter but for any quarter in the company's history. Operating income was $159 million, an increase of 37% from the prior year, and EPS was $0.41, up 46% from the prior year.
Strong Government Services Segment Performance
The Government Services Group (GSG) segment increased its net revenue by 29% year-over-year to $429 million, with a margin of 19.9%, up 230 basis points from the prior year.
Significant Federal Contract Wins
Nearly $2 billion in new contract capacity was added with the U.S. federal government, including contracts with the Army Corps of Engineers and the Environmental Protection Agency.
Improved Cash Flow and Debt Leverage
Cash flows from operations were $462 million, a 23% improvement over the previous 12 months, and net debt on EBITDA was at a leverage of 0.96x, lower than the previous year.
Positive Outlook for Digital Automation
Tetra Tech's digital automation sector is seeing some of the fastest growth, catalyzed by the adoption of AI, with a target to reach $500 million in annual revenues by 2030.
Negative Updates
Decline in U.S. Commercial and Renewable Energy Work
U.S. commercial net revenues were down 4% year-on-year, primarily driven by a 30% reduction in renewable energy work, especially in offshore wind projects.
Challenges in Australian Market
International revenues, which include Australian operations, were down 1% year-over-year, with continued decreases in infrastructure work in Australia.
Impact of Federal Government Changes on Backlog
The conversion of federal contracts to task orders has slowed down due to early retirements and changes within the government, impacting backlog growth and creating a 'book and burn' environment.
Company Guidance
During Tetra Tech's third-quarter earnings call for fiscal year 2025, the company reported record highs in operating income and earnings per share, driven by increased staff utilization in response to Southern California fires. Operating income rose by 37% to $159 million, while earnings per share increased by 46% to $0.41. Net revenue for the quarter grew by 11% to $1.06 billion, with the Government Services Group's revenue up 29% year-over-year and margins improving by 230 basis points. The Commercial/International Group achieved a 15.2% margin, up 130 basis points. The company also noted significant contract wins, including $2 billion in new U.S. federal contracts and a $94 million EPA award. Despite the strong quarter, Tetra Tech remains cautious due to changes in U.S. federal government administration, impacting sectors like renewable energy. The company updated its fiscal year 2025 guidance to a net revenue range of $4.454 billion to $4.554 billion and an adjusted EPS of $1.49 to $1.54.Tetra Tech Financial Statement Overview
Summary
Tetra Tech exhibits strong financial health with impressive revenue growth and efficient cash management. The company has maintained profitability, though increasing leverage could pose potential risks. The balance sheet remains solid, supporting its growth trajectory.Income Statement
Tetra Tech has demonstrated strong revenue growth with an increase from $3.21 billion in 2021 to $5.49 billion in TTM (Trailing-Twelve-Months) 2025. The gross profit margin has improved over the years, reflecting efficient cost management. However, the net profit margin has shown some decline, indicating challenges in controlling net expenses relative to revenue growth. The EBIT and EBITDA margins indicate solid operational performance despite the decline in EBIT over the period.85
Very Positive
Balance Sheet
The company's debt-to-equity ratio has increased, indicating higher leverage, which may pose a risk in financial flexibility. However, Tetra Tech maintains a healthy equity ratio, showing a strong asset base relative to liabilities. The return on equity has been positive, reflecting effective use of shareholders' funds to generate profits. Overall, the balance sheet is stable but with increased leverage risk.78
Positive
Cash Flow
Tetra Tech shows robust free cash flow generation with consistent growth, highlighted by substantial free cash flow in TTM 2025. The operating cash flow to net income ratio is strong, suggesting effective conversion of profits into cash. The free cash flow to net income ratio indicates efficient cash management. Despite strong cash flow generation, the increasing capital expenditures warrant monitoring for potential impacts on future cash flow.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.49B | 5.20B | 4.52B | 3.50B | 3.21B | 2.99B |
| Gross Profit | 932.47M | 866.44M | 725.03M | 575.56M | 498.40M | 446.54M |
| EBITDA | 438.34M | 584.09M | 517.40M | 393.29M | 297.37M | 267.08M |
| Net Income | 216.17M | 333.38M | 273.42M | 263.13M | 232.81M | 173.86M |
Balance Sheet | ||||||
| Total Assets | 4.35B | 4.19B | 3.82B | 2.62B | 2.58B | 2.38B |
| Cash, Cash Equivalents and Short-Term Investments | 242.83M | 232.69M | 168.83M | 185.09M | 166.57M | 157.51M |
| Total Debt | 1.07B | 1.02B | 1.09B | 462.90M | 454.24M | 553.26M |
| Total Liabilities | 2.61B | 2.36B | 2.42B | 1.44B | 1.34B | 1.34B |
| Stockholders Equity | 1.74B | 1.83B | 1.40B | 1.18B | 1.23B | 1.04B |
Cash Flow | ||||||
| Free Cash Flow | 442.23M | 340.57M | 341.56M | 325.61M | 295.80M | 250.23M |
| Operating Cash Flow | 462.44M | 358.71M | 368.46M | 336.19M | 304.37M | 262.48M |
| Investing Cash Flow | -115.01M | -111.04M | -771.20M | -55.74M | -92.99M | -63.02M |
| Financing Cash Flow | -318.91M | -191.38M | 382.38M | -249.61M | -210.10M | -163.05M |
Tetra Tech Technical Analysis
Negative
33.33
Price Trends
36.35
Negative
35.92
Negative
34.85
Negative
Market Momentum
-0.67
Positive
30.86
Neutral
4.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TTEK, the sentiment is Negative. The current price of 33.33 is below the 20-day moving average (MA) of 35.52, below the 50-day MA of 36.35, and below the 200-day MA of 34.85, indicating a bearish trend. The MACD of -0.67 indicates Positive momentum. The RSI at 30.86 is Neutral, neither overbought nor oversold. The STOCH value of 4.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | 17.12B | 26.10 | 24.63% | 0.77% | 1.50% | 164.17% | |
73 Outperform | $8.76B | 41.03 | 12.68% | 0.74% | 7.91% | -25.17% | |
73 Outperform | 17.67B | 36.55 | 13.06% | 0.85% | -30.12% | -21.04% | |
72 Outperform | 6.10B | 16.04 | 24.55% | 1.36% | 12.59% | 98.20% | |
62 Neutral | 6.82B | 1.74 | 69.52% | ― | 3.62% | 943.43% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
Performance Comparison
TTEK
Tetra Tech
33.33
-13.51
-28.84%
ACM
Aecom Technology
129.25
26.97
26.37%
FLR
Fluor
42.17
-5.54
-11.61%
J
Jacobs Solutions
147.86
19.48
15.17%
KBR
KBR
47.35
-16.98
-26.40%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.