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Tetra (TTEK) Up 5.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Tetra Tech (TTEK - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tetra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Tetra Tech reported mixed second-quarter fiscal 2020 (ended Mar 29, 2020) results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.
The company’s adjusted earnings per share in the reported quarter were 73 cents, surpassing the Zacks Consensus Estimate of 72 cents. Also, its earnings grew 4.3% from the year-ago quarter’s 70 cents on sales growth.
Revenues & Segmental Performance
In the reported quarter, Tetra Tech generated adjusted revenues of $734.1 million, reflecting year-over-year growth of 2%. Alternatively, net revenues (adjusted revenues minus subcontractor costs) were $584.5 million, roughly flat year over year. Notably, the company’s revenues missed the Zacks Consensus Estimate of $594 million by 1.6%.
Backlog at the end of the quarter was $3.06 billion, reflecting growth of 9% from the year-ago figure.
Revenues from the U.S. Federal customers accounted for 30% of the quarter’s revenues. Conversely, the U.S. Commercial, and the U.S. State and Local sales accounted for 24% and 13% of the quarter’s revenues, respectively. International sales accounted for 33% of the quarter’s revenues.
The company reports revenues under the segments discussed below:
Net sales of Government Services Group were $321 million, up 1.6% year over year.
Revenues from Commercial / International Services Group totaled $263.5 million, reflecting a year-over-year decline of 3.8%.
Operating Margin
In the reported quarter, Tetra Tech’s subcontractor costs totaled $149.7 million, reflecting growth of 9.1% from the year-ago quarter. Other costs of revenues were $487.5 million, down 0.3% year over year. Selling, general and administrative expenses were $51 million, up 4.3% year over year.
Adjusted operating income in the reported quarter declined 3.5% year over year to $52.6 million and adjusted margin decreased 20 basis points to 9%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $135 million, down 11.8% from $120.7 million recorded at the end of fiscal 2019. Long-term debt was up 3.3% sequentially to $333 million.
In the first six months of fiscal 2020, the company generated net cash of $83.2 million from operating activities, down 16.1% from the year-ago comparable period. Capital expenditure was $5.9 million, down 18.1% year over year.
Shareholder-Friendly Policy
In the first six months of fiscal 2020, the company bought back shares worth $81.7 million and distributed dividends totaling $16.4 million.
Outlook
On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, Tetra Tech has withdrawn its revenue and earnings guidance for fiscal 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Tetra has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Tetra has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Tetra (TTEK) Up 5.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Tetra Tech (TTEK - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tetra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Tetra Tech Q2 Earnings Surpass Estimates, Rise Y/Y
Tetra Tech reported mixed second-quarter fiscal 2020 (ended Mar 29, 2020) results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.
The company’s adjusted earnings per share in the reported quarter were 73 cents, surpassing the Zacks Consensus Estimate of 72 cents. Also, its earnings grew 4.3% from the year-ago quarter’s 70 cents on sales growth.
Revenues & Segmental Performance
In the reported quarter, Tetra Tech generated adjusted revenues of $734.1 million, reflecting year-over-year growth of 2%. Alternatively, net revenues (adjusted revenues minus subcontractor costs) were $584.5 million, roughly flat year over year. Notably, the company’s revenues missed the Zacks Consensus Estimate of $594 million by 1.6%.
Backlog at the end of the quarter was $3.06 billion, reflecting growth of 9% from the year-ago figure.
Revenues from the U.S. Federal customers accounted for 30% of the quarter’s revenues. Conversely, the U.S. Commercial, and the U.S. State and Local sales accounted for 24% and 13% of the quarter’s revenues, respectively. International sales accounted for 33% of the quarter’s revenues.
The company reports revenues under the segments discussed below:
Net sales of Government Services Group were $321 million, up 1.6% year over year.
Revenues from Commercial / International Services Group totaled $263.5 million, reflecting a year-over-year decline of 3.8%.
Operating Margin
In the reported quarter, Tetra Tech’s subcontractor costs totaled $149.7 million, reflecting growth of 9.1% from the year-ago quarter. Other costs of revenues were $487.5 million, down 0.3% year over year. Selling, general and administrative expenses were $51 million, up 4.3% year over year.
Adjusted operating income in the reported quarter declined 3.5% year over year to $52.6 million and adjusted margin decreased 20 basis points to 9%.
Balance Sheet and Cash Flow
Exiting the fiscal second quarter, Tetra Tech had cash and cash equivalents of $135 million, down 11.8% from $120.7 million recorded at the end of fiscal 2019. Long-term debt was up 3.3% sequentially to $333 million.
In the first six months of fiscal 2020, the company generated net cash of $83.2 million from operating activities, down 16.1% from the year-ago comparable period. Capital expenditure was $5.9 million, down 18.1% year over year.
Shareholder-Friendly Policy
In the first six months of fiscal 2020, the company bought back shares worth $81.7 million and distributed dividends totaling $16.4 million.
Outlook
On uncertainties, regarding the impacts of the coronavirus outbreak on financial and operating results, Tetra Tech has withdrawn its revenue and earnings guidance for fiscal 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
At this time, Tetra has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Tetra has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.