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Why Is Tetra (TTEK) Down 5.9% Since Last Earnings Report?
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It has been about a month since the last earnings report for Tetra Tech (TTEK - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tetra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Tetra Tech Q2 Earnings Top Estimates, Revenues Up
Tetra Tech reported solid results for the second quarter of fiscal 2021 (ended Mar 28, 2021), with earnings surpassing estimates by 10.7%. This was the 15th consecutive quarter of better-than-anticipated results.
The company’s adjusted earnings per share in the reported quarter came in at 83 cents, handily outpacing the Zacks Consensus Estimate of 75 cents. Also, earnings increased 13.7% from the year-ago quarter’s 73 cents.
The bottom line also topped management’s projection of 73-78 cents per share.
Revenues & Segmental Performance
In the fiscal second quarter, Tetra Tech generated adjusted revenues of $754.3 million, reflecting a year-over-year increase of 2.7%. Adjusted net revenues (adjusted revenues minus subcontractor costs) came in at $599.3 million, up 2.5%. The figure surpassed the company’s guidance of $565-$595 million.
Further, Tetra Tech’s adjusted net revenues exceeded the Zacks Consensus Estimate of $583 million.
Backlog at the end of the quarter was $3,150.2 million, down 1.2% from the previous quarter.
Revenues from the U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 6% year over year. Growth in advanced analytics was negated by a delay in international development projects.
The U.S. Commercial sales (21% of the quarter’s revenues) declined 7% year over year on lower discretionary industrial programs. Stability was witnessed in regulatory-driven programs.
The U.S. State and Local sales (17% of the quarter’s revenues) increased 32% on strength across municipal infrastructure backed by effective disaster response. International sales (31% of the quarter’s revenues) decreased 5% year over year.
The company reports revenues under the segments discussed below:
Net sales of Government Services Group came in at $347.1 million, up 8.1% year over year.
Revenues from Commercial / International Services Group totaled $252.2 million, underlining a year-over-year decline of 4.3%.
Margin Profile
In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $154.9 million, reflecting a rise of 3.5% from the year-ago quarter. Other costs of revenues (adjusted) were $486.8 million, up 1.1%. Selling, general and administrative expenses (adjusted) were $51.7 million, up 2.4%.
Net income in the reported quarter increased 25.1% year over year to $45.5 million, while adjusted margin expanded 110 basis points to 10.1%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $225.3 million, up 37.9% from $163.4 million recorded at the end of the prior quarter. Long-term debt was down 13.7% sequentially to $238.3 million from $276 million.
In the first six months of fiscal 2021, it generated net cash of $157.4 million from operating activities compared with $83.2 million in the year-ago period. Capital expenditure was $4.3 million, down 26.9%. In the same time frame, the company’s proceeds from borrowings amounted to $141.6 million, while repayments totaled $146.3 million.
Shareholder-Friendly Policy
In the first six months of fiscal 2021, the company bought back shares worth $30 million and distributed dividends totaling $18.4 million.
Exiting the fiscal second quarter, the company had $178 million worth authorization left under its approved buyback programs.
Outlook
For fiscal 2021 (ending September 2021), Tetra Tech anticipates net revenues of $2.45-$2.55 billion compared with $2.40-$2.55 billion guided earlier, while adjusted earnings are predicted to be $3.60-$3.70 compared with $3.45-$3.60 predicted earlier. The bottom-line projection is higher than the $3.26 recorded in fiscal 2020.
For the fiscal third quarter (ending Jun 2021), the company estimates net revenues of $600-$650 million and adjusted earnings per share of 85-90 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Tetra has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Tetra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Tetra (TTEK) Down 5.9% Since Last Earnings Report?
It has been about a month since the last earnings report for Tetra Tech (TTEK - Free Report) . Shares have lost about 5.9% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tetra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Tetra Tech Q2 Earnings Top Estimates, Revenues Up
Tetra Tech reported solid results for the second quarter of fiscal 2021 (ended Mar 28, 2021), with earnings surpassing estimates by 10.7%. This was the 15th consecutive quarter of better-than-anticipated results.
The company’s adjusted earnings per share in the reported quarter came in at 83 cents, handily outpacing the Zacks Consensus Estimate of 75 cents. Also, earnings increased 13.7% from the year-ago quarter’s 73 cents.
The bottom line also topped management’s projection of 73-78 cents per share.
Revenues & Segmental Performance
In the fiscal second quarter, Tetra Tech generated adjusted revenues of $754.3 million, reflecting a year-over-year increase of 2.7%. Adjusted net revenues (adjusted revenues minus subcontractor costs) came in at $599.3 million, up 2.5%. The figure surpassed the company’s guidance of $565-$595 million.
Further, Tetra Tech’s adjusted net revenues exceeded the Zacks Consensus Estimate of $583 million.
Backlog at the end of the quarter was $3,150.2 million, down 1.2% from the previous quarter.
Revenues from the U.S. Federal customers (accounting for 31% of the quarter’s revenues) were up 6% year over year. Growth in advanced analytics was negated by a delay in international development projects.
The U.S. Commercial sales (21% of the quarter’s revenues) declined 7% year over year on lower discretionary industrial programs. Stability was witnessed in regulatory-driven programs.
The U.S. State and Local sales (17% of the quarter’s revenues) increased 32% on strength across municipal infrastructure backed by effective disaster response. International sales (31% of the quarter’s revenues) decreased 5% year over year.
The company reports revenues under the segments discussed below:
Net sales of Government Services Group came in at $347.1 million, up 8.1% year over year.
Revenues from Commercial / International Services Group totaled $252.2 million, underlining a year-over-year decline of 4.3%.
Margin Profile
In the fiscal second quarter, Tetra Tech’s subcontractor costs totaled $154.9 million, reflecting a rise of 3.5% from the year-ago quarter. Other costs of revenues (adjusted) were $486.8 million, up 1.1%. Selling, general and administrative expenses (adjusted) were $51.7 million, up 2.4%.
Net income in the reported quarter increased 25.1% year over year to $45.5 million, while adjusted margin expanded 110 basis points to 10.1%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $225.3 million, up 37.9% from $163.4 million recorded at the end of the prior quarter. Long-term debt was down 13.7% sequentially to $238.3 million from $276 million.
In the first six months of fiscal 2021, it generated net cash of $157.4 million from operating activities compared with $83.2 million in the year-ago period. Capital expenditure was $4.3 million, down 26.9%. In the same time frame, the company’s proceeds from borrowings amounted to $141.6 million, while repayments totaled $146.3 million.
Shareholder-Friendly Policy
In the first six months of fiscal 2021, the company bought back shares worth $30 million and distributed dividends totaling $18.4 million.
Exiting the fiscal second quarter, the company had $178 million worth authorization left under its approved buyback programs.
Outlook
For fiscal 2021 (ending September 2021), Tetra Tech anticipates net revenues of $2.45-$2.55 billion compared with $2.40-$2.55 billion guided earlier, while adjusted earnings are predicted to be $3.60-$3.70 compared with $3.45-$3.60 predicted earlier. The bottom-line projection is higher than the $3.26 recorded in fiscal 2020.
For the fiscal third quarter (ending Jun 2021), the company estimates net revenues of $600-$650 million and adjusted earnings per share of 85-90 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates review flatlined during the past month.
VGM Scores
At this time, Tetra has a strong Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Tetra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.