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Here's Why it is Appropriate to Retain Tetra Tech (TTEK) Now
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Tetra Tech, Inc. (TTEK - Free Report) has been benefiting from strength in the Government Services Group (GSG) segment, accretive acquisitions and shareholder-friendly moves.
However, escalating selling, general and administrative expenses due to rising marketing costs are likely to affect TTEK’s margins in the quarters ahead. Tetra Tech’s services in the mining and oil & gas markets are highly cyclical and vulnerable to economic downturns, which may dampen its financials. Also, given its international presence, foreign currency headwinds are concerning .
What’s Aiding TTEK?
Business Strength: The company’s GSG segment is benefiting from higher inland navigation and coastal flood protection programs. Net sales from the segment increased 15% year over year in the second quarter of fiscal 2024. Increased activity on clean energy, environmental services and decarbonization programs is aiding the Commercial / International Services Group segment. The RPS acquisition is also aiding the segment. Revenues from the segment increased 10% year over year in the fiscal second quarter.
In the fiscal second quarter (ended Mar 31, 2024), the company’s revenues increased 8.1% year over year, driven by increased activity in the U.S. Federal, U.S. State & Local, U.S. Commercial and International client sectors. Tetra Tech’s focus on providing high-end consulting, design and engineering services is constantly enhancing its competitive edge.
Expansion Efforts: TTEK believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In May 2024, it acquired Convergence Controls & Engineering, a systems integration and engineering services company. This acquisition will enable Tetra Tech to offer a comprehensive line of integrated automation platform solutions to its clients across the water and energy sectors. Convergence has been added to its GSG segment. Tetra Tech acquired engineering and consulting firm, LS Technologies, in February 2024. The acquisition of LS Technologies will add significant additional capabilities and clients to the company’s federal IT practice within its GSG segment.
TTEK completed the acquisition of RPS Group plc, an established technology-enabled consultancy firm, in January 2023. The acquisition enhanced Tetra Tech’s consultancy in water, environment and sustainable infrastructure, expanded its water practice in the U.K. and strengthened its foothold in renewable energy and environmental management. It also acquired Reston, VA-based enterprise technology services, cybersecurity and management consulting firm, Amyx, Inc., in the same month. As part of the Federal Information Technology division, the Amyx acquisition expanded its use of advanced data analytics, cybersecurity, digital transformation and agile software development solutions for its government and commercial customers. Amyx has been integrated into TTEK’s GSG segment.
Rewards to Shareholders: The company is committed to rewarding its shareholders handsomely. In the first six months of fiscal 2024, Tetra Tech paid out dividends of $27.8 million, up 14.3% year over year. The quarterly dividend rate was hiked 13% in May 2023. In fiscal 2023, the company distributed dividends totaling $52.1 million. Such diligent capital-deployment strategies boost shareholders’ wealth.
In light of the above-mentioned factors, we believe investors should retain TTEK stock for now, as suggested by its Zacks Rank #3 (Hold). Shares of the company have gained 22% in the year-to-date period compared with the industry’s 14.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 10.8% in the year-to-date period.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 6.7%, on average.
The consensus estimate for BRC’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Brady have gained 11.3% in the year-to-date period.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.8% in the past 60 days. Its shares have gained 22.4% in the year-to-date period.
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Here's Why it is Appropriate to Retain Tetra Tech (TTEK) Now
Tetra Tech, Inc. (TTEK - Free Report) has been benefiting from strength in the Government Services Group (GSG) segment, accretive acquisitions and shareholder-friendly moves.
However, escalating selling, general and administrative expenses due to rising marketing costs are likely to affect TTEK’s margins in the quarters ahead. Tetra Tech’s services in the mining and oil & gas markets are highly cyclical and vulnerable to economic downturns, which may dampen its financials. Also, given its international presence, foreign currency headwinds are concerning .
What’s Aiding TTEK?
Business Strength: The company’s GSG segment is benefiting from higher inland navigation and coastal flood protection programs. Net sales from the segment increased 15% year over year in the second quarter of fiscal 2024. Increased activity on clean energy, environmental services and decarbonization programs is aiding the Commercial / International Services Group segment. The RPS acquisition is also aiding the segment. Revenues from the segment increased 10% year over year in the fiscal second quarter.
In the fiscal second quarter (ended Mar 31, 2024), the company’s revenues increased 8.1% year over year, driven by increased activity in the U.S. Federal, U.S. State & Local, U.S. Commercial and International client sectors. Tetra Tech’s focus on providing high-end consulting, design and engineering services is constantly enhancing its competitive edge.
Expansion Efforts: TTEK believes in expanding its market presence, solidifying its customer base and enhancing product offerings through acquisitions. In May 2024, it acquired Convergence Controls & Engineering, a systems integration and engineering services company. This acquisition will enable Tetra Tech to offer a comprehensive line of integrated automation platform solutions to its clients across the water and energy sectors. Convergence has been added to its GSG segment. Tetra Tech acquired engineering and consulting firm, LS Technologies, in February 2024. The acquisition of LS Technologies will add significant additional capabilities and clients to the company’s federal IT practice within its GSG segment.
TTEK completed the acquisition of RPS Group plc, an established technology-enabled consultancy firm, in January 2023. The acquisition enhanced Tetra Tech’s consultancy in water, environment and sustainable infrastructure, expanded its water practice in the U.K. and strengthened its foothold in renewable energy and environmental management. It also acquired Reston, VA-based enterprise technology services, cybersecurity and management consulting firm, Amyx, Inc., in the same month. As part of the Federal Information Technology division, the Amyx acquisition expanded its use of advanced data analytics, cybersecurity, digital transformation and agile software development solutions for its government and commercial customers. Amyx has been integrated into TTEK’s GSG segment.
Rewards to Shareholders: The company is committed to rewarding its shareholders handsomely. In the first six months of fiscal 2024, Tetra Tech paid out dividends of $27.8 million, up 14.3% year over year. The quarterly dividend rate was hiked 13% in May 2023. In fiscal 2023, the company distributed dividends totaling $52.1 million. Such diligent capital-deployment strategies boost shareholders’ wealth.
In light of the above-mentioned factors, we believe investors should retain TTEK stock for now, as suggested by its Zacks Rank #3 (Hold). Shares of the company have gained 22% in the year-to-date period compared with the industry’s 14.7% growth.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 10.8% in the year-to-date period.
Brady Corporation (BRC - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 6.7%, on average.
The consensus estimate for BRC’s fiscal 2024 earnings has increased 3.3% in the past 60 days. Shares of Brady have gained 11.3% in the year-to-date period.
Crane Company (CR - Free Report) presently carries a Zacks Rank of 2. CR delivered a trailing four-quarter earnings surprise of 15.2%, on average.
The Zacks Consensus Estimate for CR’s 2024 earnings has increased 0.8% in the past 60 days. Its shares have gained 22.4% in the year-to-date period.