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Tetra (TTEK) Down 10.7% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Tetra Tech (TTEK - Free Report) . Shares have lost about 10.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tetra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tetra Tech reported impressive first-quarter fiscal 2023 results. The company’s earnings beat the Zacks Consensus Estimate by 11.7%, marking the 22nd consecutive quarter of delivering a surprise. Sales also surpassed estimates by 2.2%.
Tetra Tech’s adjusted earnings per share in the reported quarter were $1.34, ahead of the Zacks Consensus Estimate of $1.20. Quarterly earnings expanded 12.6% from the year-ago reported figure of $1.19.
The bottom line also surpassed management’s projection of $1.15-$1.20 per share.
Revenue & Segmental Performance
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $894.8 million, reflecting a year-over-year increase of 4.2%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $736.6 million, up 8.4% year over year. The quarterly top line came above management’s guidance of $675-$725 million.
Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $721 million.
The backlog at the end of the quarter was $3,814.3 million, up 11% year over year.
Revenues from U.S. Federal customers (accounting for 28% of the quarter’s revenues) were up 10% year over year. U.S. Commercial sales (24% of the quarter’s revenues) increased 22% year over year on higher renewable energy and environmental programs.
U.S. State and Local sales (17% of the quarter’s revenues) increased 10% due to strength in municipal infrastructure and digital water. International sales (31% of the quarter’s revenues) increased 13% year over year, backed by strength in sustainable infrastructure and high-performance building.
Tetra Tech reports revenues under the segments discussed below:
Net sales of Government Services Group were $471.1 million, up 3.3% year over year. Revenues from the Commercial/International Services Group totaled $439.6 million, representing a year-over-year increase of 5.6%.
Margin Profile
In the fiscal first quarter, Tetra Tech’s subcontractor costs totaled $158.2 million, reflecting a decrease of 11.7% from the year-ago quarter. Other costs of revenues were $583.3 million, up 8.1%. Selling, general and administrative expenses were $56.5 million, up 7.5% from the year-ago quarter.
Operating income (adjusted) in the reported quarter increased 17% year over year to $97 million, while the adjusted margin expanded 90 basis points to 13.1%.
Balance Sheet and Cash Flow
While exiting first-quarter fiscal 2023, Tetra Tech had cash and cash equivalents of $164.4 million, up 11.2% from $185.1 million recorded at the end of the fourth quarter of fiscal 2022. Long-term debt increased 5% from $234.1 million recorded at the end of fourth-quarter fiscal 2022 to $246.3 million.
In the first three months of fiscal 2023, Tetra Tech generated net cash of $25.2 million from operating activities compared with $82.4 million in the prior fiscal year’s comparable period. Capital expenditure was $5 million, up 233.3% year over year. In the said period, TTEK’s proceeds from borrowings amounted to $60.9 million, while repayments on long-term debt totaled $73.1 million.
Shareholder-Friendly Policies
Tetra Tech didn’t buy back shares in the fiscal first quarter. It bought back shares worth $50 million in the year-ago quarter. It distributed dividends totaling $12.2 million in the first quarter of fiscal 2023. This compares favorably with the dividends of $10.8 million distributed in the fiscal first quarter of 2022.
Outlook
For fiscal 2023 (ending September 2023), Tetra Tech anticipates net revenues of $3.00- $3.15 billion compared with $2.90-$3.10 billion anticipated earlier. Adjusted earnings are predicted to be $4.90 - $5.05 compared with $4.70-$4.90 per share predicted earlier.
For the second quarter of fiscal 2023 (ending March 2023), management estimates net revenues of $ $685-$735 million and adjusted earnings of $1.03-$1.08 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -8.61% due to these changes.
VGM Scores
Currently, Tetra has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tetra has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Tetra (TTEK) Down 10.7% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Tetra Tech (TTEK - Free Report) . Shares have lost about 10.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tetra due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tetra Tech Q1 Earnings & Revenues Beat, Increase Y/Y
Tetra Tech reported impressive first-quarter fiscal 2023 results. The company’s earnings beat the Zacks Consensus Estimate by 11.7%, marking the 22nd consecutive quarter of delivering a surprise. Sales also surpassed estimates by 2.2%.
Tetra Tech’s adjusted earnings per share in the reported quarter were $1.34, ahead of the Zacks Consensus Estimate of $1.20. Quarterly earnings expanded 12.6% from the year-ago reported figure of $1.19.
The bottom line also surpassed management’s projection of $1.15-$1.20 per share.
Revenue & Segmental Performance
In the fiscal first quarter, Tetra Tech generated adjusted revenues of $894.8 million, reflecting a year-over-year increase of 4.2%. Adjusted net revenues (adjusted revenues minus subcontractor costs) were $736.6 million, up 8.4% year over year. The quarterly top line came above management’s guidance of $675-$725 million.
Tetra Tech’s revenues exceeded the Zacks Consensus Estimate of $721 million.
The backlog at the end of the quarter was $3,814.3 million, up 11% year over year.
Revenues from U.S. Federal customers (accounting for 28% of the quarter’s revenues) were up 10% year over year. U.S. Commercial sales (24% of the quarter’s revenues) increased 22% year over year on higher renewable energy and environmental programs.
U.S. State and Local sales (17% of the quarter’s revenues) increased 10% due to strength in municipal infrastructure and digital water. International sales (31% of the quarter’s revenues) increased 13% year over year, backed by strength in sustainable infrastructure and high-performance building.
Tetra Tech reports revenues under the segments discussed below:
Net sales of Government Services Group were $471.1 million, up 3.3% year over year. Revenues from the Commercial/International Services Group totaled $439.6 million, representing a year-over-year increase of 5.6%.
Margin Profile
In the fiscal first quarter, Tetra Tech’s subcontractor costs totaled $158.2 million, reflecting a decrease of 11.7% from the year-ago quarter. Other costs of revenues were $583.3 million, up 8.1%. Selling, general and administrative expenses were $56.5 million, up 7.5% from the year-ago quarter.
Operating income (adjusted) in the reported quarter increased 17% year over year to $97 million, while the adjusted margin expanded 90 basis points to 13.1%.
Balance Sheet and Cash Flow
While exiting first-quarter fiscal 2023, Tetra Tech had cash and cash equivalents of $164.4 million, up 11.2% from $185.1 million recorded at the end of the fourth quarter of fiscal 2022. Long-term debt increased 5% from $234.1 million recorded at the end of fourth-quarter fiscal 2022 to $246.3 million.
In the first three months of fiscal 2023, Tetra Tech generated net cash of $25.2 million from operating activities compared with $82.4 million in the prior fiscal year’s comparable period. Capital expenditure was $5 million, up 233.3% year over year. In the said period, TTEK’s proceeds from borrowings amounted to $60.9 million, while repayments on long-term debt totaled $73.1 million.
Shareholder-Friendly Policies
Tetra Tech didn’t buy back shares in the fiscal first quarter. It bought back shares worth $50 million in the year-ago quarter. It distributed dividends totaling $12.2 million in the first quarter of fiscal 2023. This compares favorably with the dividends of $10.8 million distributed in the fiscal first quarter of 2022.
Outlook
For fiscal 2023 (ending September 2023), Tetra Tech anticipates net revenues of $3.00- $3.15 billion compared with $2.90-$3.10 billion anticipated earlier. Adjusted earnings are predicted to be $4.90 - $5.05 compared with $4.70-$4.90 per share predicted earlier.
For the second quarter of fiscal 2023 (ending March 2023), management estimates net revenues of $ $685-$735 million and adjusted earnings of $1.03-$1.08 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -8.61% due to these changes.
VGM Scores
Currently, Tetra has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tetra has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.