Back to top

Image: Bigstock

Tetra Tech (TTEK) Board Okays $400M Share Buyback Program

Read MoreHide Full Article

Tetra Tech, Inc. (TTEK - Free Report) announced that its board of directors approved an additional share buyback program worth $400 million. The authorization reflects the company’s shareholder-friendly policies and strong cash position.

In the past two trading days, Tetra Tech’s shares have gained 3.2%, eventually closing the trading session at $157.96 on Friday.

Inside the Headlines

As noted, the $400-million buyback program is in addition to the company’s previous $200-million authorization approved in January 2020. Tetra Tech bought back $45 million worth of shares through open-market transactions in the first three quarters of fiscal 2021 (ended Jun 27, 2021). Specifically, the company bought back 368,177 shares at the rate of $122.22.

Exiting the third quarter of fiscal 2021 (ended Jun 27, 2021), the company was left to repurchase $163 million worth of shares. With the new $400-million program, the company is now left to repurchase $563 million worth of shares under its approved buyback programs.

It is worth noting here that Tetra Tech’s shares outstanding were 54.7 million at the end of the third quarter of fiscal 2021. Also, its cash and cash equivalents were $234.3 million exiting the said quarter, reflecting a sequential increase of 4%.

We believe that improvements in its cash position and financial performances in the quarters ahead will enable the company to reward its shareholders handsomely.

Capital Deployment

Tetra Tech effectively uses capital for boosting organic growth, making acquisitions and rewarding shareholders through dividend payments and share buybacks.

In the first three quarters of fiscal 2021, the company used $17.2 million on business acquisitions (net of acquired cash). During the same period, it added Coanda Research & Development, The Kaizen Company, IBRA-RMAC Automation Systems, Segue Technologies, Inc., and BlueWater Federal Solutions, Inc. In July 2021, Tetra Tech acquired Hoare Lea.

Dividend payments totaled $29.2 million, while share buybacks were worth $45 million (as mentioned above) in the first three quarters of fiscal 2021.

Zacks Rank, Price Performance and Earnings Estimates

With a market capitalization of $8.5 billion, Tetra Tech presently carries a Zacks Rank #3 (Hold). It gains from buyouts, shareholder-friendly policies, solid backlog and strengthening demand. Rising costs and expenses are concerning for the company.

In the past three months, shares of Tetra Tech have increased 25.5% compared with the industry’s growth of 6.8%.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The Zacks Consensus Estimate of the company’s earnings estimates has been unchanged at $3.70 for fiscal 2021 (ended September 2021, results are awaited) and $3.94 for fiscal 2022 (ending September 2022) in the past 60 days. The consensus estimate for the fourth quarter of fiscal 2021 (ended September 2021, results are awaited) is pegged at 99 cents, reflecting no change in the past 60 days.

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 industry are Fuel Tech, Inc. (FTEK - Free Report) , Casella Waste Systems, Inc. (CWST - Free Report) and HeritageCrystal Clean, Inc. (HCCI - Free Report) . While Fuel Tech currently sports a Zacks Rank #1 (Strong Buy), both Casella Waste and HeritageCrystal carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings surprises, on average, for the last four reported quarters were a positive 101.67% for Fuel Tech, 37.83% for Casella Waste and 108.81% for HeritageCrystal.