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Tetra Tech (TTEK) Joint Venture Wins $50M Contract From FEMA

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Tetra Tech, Inc. (TTEK - Free Report) yesterday communicated that it secured a $50-million worth contract from the United States’ Federal Emergency Management Agency (“FEMA”). This contract is applicable for a 5-year period and comes under the ambit of FEMA’s Hazard Mitigation Technical Assistance Program.

Notably, this contract is the second deal awarded to the company by any federal agency this month. Two days ago, it received an architect and engineering services contract, valued at $150 million, from the U.S. Naval Facilities Engineering Command.

Per the $50-million single-award contract, a joint venture led by Tetra Tech will help FEMA in prioritizing communities that need help in a disaster-stricken environment and also in managing the situation in a cost-effective manner. Further, the company will help in educating the communities situated in FEMA regions 5, 6 and 7, to be more resilient to natural disasters — including wildfire, flood and earthquake.

We believe that the aforementioned contract will help Tetra Tech to strengthen its existing business with the federal agency.

Order wins, especially from the U.S. federal government agencies or related institutions, are likely to benefit the company in the quarters ahead. At the end of the fourth quarter of fiscal 2020 (ended Sep 27, 2020), the company had a solid backlog of $3,239.3 million, reflecting growth of 5.6% from the third quarter of fiscal 2020.

Of several contracts, Tetra Tech secured a $209-million environmental services contract from the U.S. Army Corps of Engineers (“USACE”) in October 2020. In the same month, the company received a $24-million contract from the U.S. Agency for International Development (“USAID”) for the management of water resources.

In September 2020, the company received a $68-million contract from the U.S. Environmental Protection Agency (“EPA”) for providing extensive scientific and technical support services.

For fiscal 2021 (ending September 2021), Tetra Tech anticipates net revenues from the U.S. federal clients to grow 5%. The upside is likely to be driven by enhanced analytics used in the water and environmental programs.

Zacks Rank, Price Performance and Earnings Estimates

Tetra Tech, with a $6.6-billion market capitalization, currently carries a Zacks Rank #4 (Sell). The company is poised to benefit from a healthy backlog level, sound business from federal clients and a diversified business structure. However, the pandemic-related headwinds on its international business, especially in the U.K. and Australia, are concerning.

In the past three months, Tetra Tech’s share price has increased 30.3% compared with the industry’s growth of 15.2%.




 

In the past 30 days, the company’s earnings estimates for the first quarter of fiscal 2021 (ending December 2020) have been lowered by 1.2% to 81 cents per share. Also, during the same timeframe, the consensus estimate for fiscal 2021 (ending September 2021) decreased 0.3% to $3.37, while that for fiscal 2022 (ending September 2022) has been unchanged at $3.77.

Tetra Tech, Inc. Price and Consensus

 

Tetra Tech, Inc. Price and Consensus

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

Stocks to Consider

Some better-ranked stocks in the Zacks Industrial Products sector are Donaldson Company, Inc. (DCI - Free Report) , Energy Recovery, Inc. (ERII - Free Report) and Dover Corporation (DOV - Free Report) . All these companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 30 days, earnings estimates for Donaldson have been stable, while improved for Energy Recovery and Dover. Further, the earnings surprise for the last reported quarter was 13.64% for Donaldson, 233.33% for Energy Recovery and 22.14% for Dover.

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