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End-Market Strength Aids Tetra Tech (TTEK) Despite Cost Woes
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Tetra Tech, Inc. (TTEK - Free Report) benefits from its presence in the diverse end markets, which allows it to offset risks associated with a single market. Strength in businesses associated with the local, state, commercial and international clients will aid TTEK in the quarters ahead. Water & environment, international development and climate-change projects also benefited Tetra Tech for some time. Factors like U.S. infrastructure stimulus, U.S. administration priorities and TTEK’s global focus on climate change are anticipated to drive its performance in the near term.
TTEK follows a balanced capital-allocation strategy, enabling it to utilize its cash flow to improve organic growth capabilities and acquisitions. In September 2022, Tetra Tech inked a deal to acquire RPS Group plc. The acquisition will enhance TTEK’s consultancy in water, environment and sustainable infrastructure. It will expand TTEK’s water practice in the United Kingdom besides strengthening its foothold in renewable energy and environmental management.
Tetra Tech’s acquisition of Piteau Associates (March 2022) enhanced its capabilities in advanced analytics to provide water-management and geotechnical solutions for its customers. The Axiom Data Science buyout in the same month strengthened TTEK’s advanced climate data analytics solutions offerings. TTEK’s acquisition spending totaled $33.6 million in the first nine months of fiscal 2022 (ended September 2022).
Tetra Tech’s measures to reward its shareholders through share repurchases and dividend payouts are encouraging. TTEK paid out dividends worth $33.9 million and repurchased shares worth $150 million in the first nine months of fiscal 2022. In May 2022, the quarterly dividend rate was hiked 15%. Tetra Tech was left to repurchase shares worth $397.8 million, exiting the third quarter of fiscal 2022 (ended June 2022).
However, TTEK’ high raw material costs, labor shortages and supply-chain issues persist, affecting its margins and profitability. In the fiscal third quarter, its subcontractor cost increased 3.7% on a year-over-year basis. Also, its selling, distribution and administrative expenses rose 8.6%.
Foreign exchange woes are an added headwind to Tetra Tech, given its widespread presence in the international markets. A decline in the value of the local currencies of foreign markets relative to the U.S. dollar might affect TTEK’s top line in the quarters ahead.
Image Source: Zacks Investment Research
In the past three months, this currently Zacks Rank #3 (Hold) stock has dipped 4.7% against the industry’s increase of 1.5%.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. Its shares have gained 12.6% in the past three months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 2.1%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 0.1% for 2022. The stock has rallied 13.3% in the past three months.
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End-Market Strength Aids Tetra Tech (TTEK) Despite Cost Woes
Tetra Tech, Inc. (TTEK - Free Report) benefits from its presence in the diverse end markets, which allows it to offset risks associated with a single market. Strength in businesses associated with the local, state, commercial and international clients will aid TTEK in the quarters ahead. Water & environment, international development and climate-change projects also benefited Tetra Tech for some time. Factors like U.S. infrastructure stimulus, U.S. administration priorities and TTEK’s global focus on climate change are anticipated to drive its performance in the near term.
TTEK follows a balanced capital-allocation strategy, enabling it to utilize its cash flow to improve organic growth capabilities and acquisitions. In September 2022, Tetra Tech inked a deal to acquire RPS Group plc. The acquisition will enhance TTEK’s consultancy in water, environment and sustainable infrastructure. It will expand TTEK’s water practice in the United Kingdom besides strengthening its foothold in renewable energy and environmental management.
Tetra Tech’s acquisition of Piteau Associates (March 2022) enhanced its capabilities in advanced analytics to provide water-management and geotechnical solutions for its customers. The Axiom Data Science buyout in the same month strengthened TTEK’s advanced climate data analytics solutions offerings. TTEK’s acquisition spending totaled $33.6 million in the first nine months of fiscal 2022 (ended September 2022).
Tetra Tech’s measures to reward its shareholders through share repurchases and dividend payouts are encouraging. TTEK paid out dividends worth $33.9 million and repurchased shares worth $150 million in the first nine months of fiscal 2022. In May 2022, the quarterly dividend rate was hiked 15%. Tetra Tech was left to repurchase shares worth $397.8 million, exiting the third quarter of fiscal 2022 (ended June 2022).
However, TTEK’ high raw material costs, labor shortages and supply-chain issues persist, affecting its margins and profitability. In the fiscal third quarter, its subcontractor cost increased 3.7% on a year-over-year basis. Also, its selling, distribution and administrative expenses rose 8.6%.
Foreign exchange woes are an added headwind to Tetra Tech, given its widespread presence in the international markets. A decline in the value of the local currencies of foreign markets relative to the U.S. dollar might affect TTEK’s top line in the quarters ahead.
Image Source: Zacks Investment Research
In the past three months, this currently Zacks Rank #3 (Hold) stock has dipped 4.7% against the industry’s increase of 1.5%.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Enerpac Tool Group Corp. (EPAC - Free Report) presently sports a Zacks Rank #1. EPAC delivered a trailing four-quarter earnings surprise of 3.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks.
EPAC’s earnings estimates have increased 9.1% for fiscal 2023 (ending August 2023) in the past 60 days. Its shares have gained 12.6% in the past three months.
IDEX Corporation (IEX - Free Report) presently has a Zacks Rank #2 (Buy). IEX’s earnings surprise in the last four quarters was 2.1%, on average.
In the past 60 days, IDEX’s earnings estimates have increased 0.1% for 2022. The stock has rallied 13.3% in the past three months.