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Tetra Tech (TTEK) Rises 10% YTD: What's Driving the Rally?

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Tetra Tech, Inc. (TTEK - Free Report) is among a handful of industrial stocks that have recorded double-digit growth in share price since the beginning of 2020. The $5.3-billion industrial company’s solid fundamentals, promising growth opportunities and impressive financial performances have aided to its rise.

The Pasadena-based company belongs to the Zacks Pollution Control industry, which, in turn, comes under the ambit of the Zacks Industrial Products sector. The company’s earnings are predicted to rise 15.50% in the next five years. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, the company’s shares have gained 10.3% against the industry’s decline of 1.1% and the sector’s fall of 2.9%. Notably, the S&P 500 has grown just 0.1% during the same period.




Factors Driving the Stock

So far in 2020, Tetra Tech has reported results for first-quarter fiscal 2020 (ended Dec 29, 2019). Results were impressive, with earnings and sales surpassing the Zacks Consensus Estimate by 9.1% and 0.9%, respectively. The company benefitted from growth in business from the U.S. Federal, the U.S. Commercial and international customers.

In addition to better-than-expected results, sound projections provided by Tetra Tech must have added to positive sentiments for the stock. For fiscal 2020 (ending September 2020), healthy demand for sustainable buildings and environmental services, rise in environmental and infrastructure programs, growth in the U.S. Federal budget, and strengthening disaster recovery and municipal water infrastructure businesses are anticipated to benefit the company.

Going by numbers, sales from the U.S. Commercial clients are anticipated to rise 3-8% in the year, while that from the U.S. Federal clients are likely to grow 5-10%, and the U.S. State and Local customers re expected to expand 10-15%. Additionally, the business in the international arena will likely flourish, with sales predicted to increase 7-12%. Adjusted earnings for the year will likely be $3.40-$3.55 per share, up from $3.35-$3.55 mentioned previously.

The company is gaining from its focus on high-end engineering and consulting services. Also, its focus on rewarding shareholders handsomely through dividend payments and share buybacks enhances its attractiveness. Additionally, the company’s acquisitive nature helps in expanding businesses globally.

Some noteworthy events are Tetra Tech’s buyout of WYG plc — a provider of engineering and consulting services — in July 2019 and the acquisition of eGlobalTech in April 2019. While WYG plc is strengthening the company’s business in the U.K. and Europe as well as in environment, water and infrastructure markets; eGlobalTech is boosting its business from commercial and government customers.

Currently, the Zacks Consensus Estimate for Tetra Tech’s earnings is pegged at $3.51 for fiscal 2020 and $3.80 for fiscal 2021 (ending September 2021), marking growth of 1.4% and 2.2% from the respective 30-day-ago figures. Such positive revisions in earnings estimates are reflective of positive sentiments for the company.

Tetra Tech, Inc. Price and Consensus

 

Tetra Tech, Inc. Price and Consensus

Tetra Tech, Inc. price-consensus-chart | Tetra Tech, Inc. Quote

Tetra Tech’s Performance Versus Three Other Companies

The company outperformed three companies that belong to the same industry. Three such stocks are Energy Recovery, Inc. (ERII - Free Report) , LiqTech International, Inc. (LIQT - Free Report) and Advanced Emissions Solutions, Inc. , with respective year-to-date gains of 6%, 2.6% and 5%.
 
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