Here's Why Investors Should Bet on Tetra Tech (TTEK) Stock

Zacks Equity Research
·3-min read

Tetra Tech, Inc. TTEK is poised to gain from strength in the Government Services Group (GSG) segment, accretive acquisitions and shareholder-friendly moves.

Let’s delve into the factors that make this Zacks Rank #2 (Buy) company a smart investment choice at the moment.

Business Strength: Tetra Tech expects key factors, including U.S. administration priorities, U.S. infrastructure stimulus and its focus on climate change on a global basis, to drive markets in the quarters ahead. The U.S. administration targets international development, climate change, and water & environment as its priorities. 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 fiscal second quarter (ended Mar 31, 2024).

Increased activity on clean energy, environmental services and decarbonization programs are aiding the Commercial / International Services Group segment. The RPS acquisition is also proving to be beneficial. Revenues from the segment increased 10% year over year in the fiscal second quarter.

Expansion Efforts: Over time, Tetra Tech has steadily strengthened its business through acquisitions. It acquired engineering and consulting firm LS Technologies in February 2024. The acquisition of LS Technologies adds significant additional capabilities and clients to the company’s federal IT practice within its GSG segment. Tetra Tech completed the acquisition of RPS Group plc, an established technology-enabled consultancy firm, in January 2023. The acquisition enhanced TTEK’s consultancy in water, environment and sustainable infrastructure, expanding its water practice in the United Kingdom and strengthening 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 expands the use of advanced data analytics, cybersecurity, digital transformation and agile software development solutions for its government and commercial customers. Amyx is integrated into TTEK’s GSG segment.

Rewards to Shareholders: The company continues to increase shareholders’ value through dividend payments and share repurchases. 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. Such diligent capital-deployment strategies boost shareholders’ wealth.

Northward Estimate Revision: In the past 60 days, the Zacks Consensus Estimate for Tetra Tech’s fiscal 2024 (ending September 2024) earnings has been revised 2.1% upward.

Price Performance: Shares of the company have soared 58.9% in a year compared with the industry‘s 13.1% growth.

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Other Stocks to Consider

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

Applied Industrial Technologies, Inc. AIT 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 2.1% in the past 60 days. The stock has risen 52.8% in the past year.

Belden Inc. BDC presently carries a Zacks Rank of 2 and has a trailing four-quarter earnings surprise of 14.7%, on average.

The consensus estimate for BDC’s 2024 earnings has increased 8.3% in the past 60 days. Shares of Belden have risen 8.6% in the past year.

Crane Company CR 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 3.3% in the past 60 days. Its shares have risen 94.8% in the past year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report

Applied Industrial Technologies, Inc. (AIT) : Free Stock Analysis Report

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