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Reasons Why Tetra Tech (TTEK) Should be in Your Portfolio

Tetra Tech, Inc. TTEK is well poised for growth courtesy of strength across its end markets, strategic acquisitions and focus on operational excellence. The company remains focused on investing in growth opportunities and solidifying its long-term market position.

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Zacks Investment Research


Image Source: Zacks Investment Research

It has a market capitalization of $9.9 billion. Over the past year, it has gained 26.3% compared with the industry’s growth of 7.3%. TTEK currently carries a Zacks Rank #2 (Buy).

Let’s delve into the factors that have been aiding the firm for a while now.

Business Strength: The company is witnessing solid orders from the U.S. Federal, U.S. State & Local, U.S. Commercial and International client sectors. Its Government Services Group segment is benefiting from higher inland waterways and coastal flood protection programs, as well as continued support for the USA energy programs. Net sales from the segment increased 25% year over year in first-quarter fiscal 2024 (ended Dec 31, 2023).

Also, increased activity on clean energy and environmental services programs are supporting the Commercial / International Services Group segment. Revenues from the segment increased 49% year over year in the fiscal first quarter.

Acquisition Benefits: Tetra Tech remains focused on acquiring businesses to gain access to new customers, regions and product lines. The acquisition of LS Technologies (in February 2024) introduced additional capabilities and clients to its federal IT practice within its Government Services Group segment. Also, the RPS Group buyout (in January 2023) expanded TTEK’s water practice in the United Kingdom, and strengthened its foothold in renewable energy and environmental management.

The Amyx acquisition (in January 2023) expanded the use of advanced data analytics, cybersecurity, digital transformation and agile software development solutions for TTEK’s government and commercial customers. The company spent $854.3 million on acquisitions in fiscal 2023 (ended Sep 30, 2023).

Shareholder-Friendly Policies: Tetra Tech remains committed to rewarding its shareholders through dividend payouts. For instance, in the first three months of fiscal 2024, it paid out dividends of $13.9 million, up 13.9% year over year. In fiscal 2023, the company distributed dividends totaling $52.1 million. Also, it hiked the quarterly dividend rate by 13% in May 2023.

Bullish Guidance: Driven by strength across its business, management has issued a bullish revenue guidance for fiscal 2024 (ending Sep 30, 2024). Tetra Tech expects revenues in the range of $4.15-$4.30 billion, suggesting an increase of 11.2% at the mid-point from the year-ago levels.

Other Stocks to Consider

Some other top-ranked companies from the Industrial Products sector are discussed below.

Atmus Filtration Technologies Inc. ATMU presently sports a Zacks Rank #1 (Strong Buy) and has a trailing four-quarter earnings surprise of 20.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for ATMU’s earnings has increased 8.3% for 2024 in the past 60 days.

Donaldson Company DCI presently carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 4.5%, on average. The consensus estimate for DCI’s earnings has increased 2.8% for fiscal 2024 (ending July 2024) in the past 60 days.

Fuel Tech, Inc. FTEK presently carries a Zacks Rank #2 and has a trailing four-quarter earnings surprise of 11.1%, on average. The consensus estimate for FTEK’s earnings has surged 62% for 2024 in the past 60 days.

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Donaldson Company, Inc. (DCI) : Free Stock Analysis Report

Fuel Tech, Inc. (FTEK) : Free Stock Analysis Report

Atmus Filtration Technologies Inc. (ATMU) : Free Stock Analysis Report

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