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Tetra Tech Gains From Business Strength Amid Persisting Headwinds
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Key Takeaways
Tetra Tech's GSG sales rose 15.1% on water infrastructure, disaster response and federal sector strength.
CIG revenue grew 1% on U.K. and Ireland water programs and momentum in high-performance buildings.
Acquisitions expanded digital automation, systems integration and European market presence for Tetra Tech.
Tetra Tech, Inc. (TTEK - Free Report) has been witnessing solid momentum across its segments. The company’s Government Services Group (GSG) segment is benefiting from a solid pipeline of advanced water infrastructure projects, disaster response programs and strength in the federal sector. Net sales from the segment increased 15.1% year over year in the first nine months of fiscal 2025 (ended June 2025). Higher planning and design related activities in water programs in United Kingdom and Ireland, and solid momentum in high-performance buildings market are aiding the Commercial / International Services Group (CIG) segment. Revenues from the segment increased approximately 1% year over year in the first nine months of the fiscal year.
TTEK solidified its product portfolio and leveraged business opportunities through asset additions. In the third quarter of fiscal 2025, Tetra Tech acquired SAGE Group Holdings, which enabled it to boost its digital automation offerings across municipal water and industrial manufacturing automation, systems integration and smart infrastructure verticals. In March 2025 (ended March 2025), it acquired Carron + Walsh ("CAW") which expanded the company’s presence in Europe. Both companies are included in Tetra Tech’s CIG segment.
In May 2024, TTEK acquired Convergence Controls & Engineering, a systems integration and engineering services company. This acquisition enables Tetra Tech to offer a comprehensive line of integrated automation platform solutions to its clients across the water and energy sectors. Convergence is part of its GSG segment.
Tetra Tech is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first nine months of fiscal 2025, the company distributed dividends totaling $48 million, up 10.9% year over year. It repurchased shares worth $200 million in the same period. TTEK hiked the dividend rate by 16.7% in May 2025.
Price Performance of TTEK
In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 26.2% compared with the industry’s 24.6% growth.
However, Tetra Tech has been dealing with the adverse impacts of high costs. The company's total cost of sales (including subcontractor costs and other costs of revenues) increased 6.9% in the first nine months of fiscal 2025 due to rising input costs. Also, its selling, general and administrative expenses remained high at $255 million in the first nine months of the fiscal 2025. Escalating costs pose a threat to the bottom line.
High debt levels are concerning for Tetra Tech as they raise financial obligations and may drain its profitability. The company exited third-quarter fiscal 2025 with a long-term debt of $862.5 million compared with $764.2 million reported at the end of the second quarter of fiscal 2025. The increase in its debt level was primarily attributable to the funds raised for the SAGE acquisition. Its overall current liabilities were $1.38 billion, much higher than the cash equivalents of $242.8 million.
ATMU delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for Atmus Filtration’s 2025 earnings has increased 3.6%.
Donaldson Company, Inc. (DCI - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 1%.
In the past 60 days, the consensus estimate for DCI’s fiscal 2026 earnings has increased 4.1%.
DNOW Inc. (DNOW - Free Report) presently carries a Zacks Rank of 2. DNOW delivered a trailing four-quarter average earnings surprise of 44.1%.
In the past 60 days, the consensus estimate for DNOW’s 2025 earnings has increased 9.2%.
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Tetra Tech Gains From Business Strength Amid Persisting Headwinds
Key Takeaways
Tetra Tech, Inc. (TTEK - Free Report) has been witnessing solid momentum across its segments. The company’s Government Services Group (GSG) segment is benefiting from a solid pipeline of advanced water infrastructure projects, disaster response programs and strength in the federal sector. Net sales from the segment increased 15.1% year over year in the first nine months of fiscal 2025 (ended June 2025). Higher planning and design related activities in water programs in United Kingdom and Ireland, and solid momentum in high-performance buildings market are aiding the Commercial / International Services Group (CIG) segment. Revenues from the segment increased approximately 1% year over year in the first nine months of the fiscal year.
TTEK solidified its product portfolio and leveraged business opportunities through asset additions. In the third quarter of fiscal 2025, Tetra Tech acquired SAGE Group Holdings, which enabled it to boost its digital automation offerings across municipal water and industrial manufacturing automation, systems integration and smart infrastructure verticals. In March 2025 (ended March 2025), it acquired Carron + Walsh ("CAW") which expanded the company’s presence in Europe. Both companies are included in Tetra Tech’s CIG segment.
In May 2024, TTEK acquired Convergence Controls & Engineering, a systems integration and engineering services company. This acquisition enables Tetra Tech to offer a comprehensive line of integrated automation platform solutions to its clients across the water and energy sectors. Convergence is part of its GSG segment.
Tetra Tech is committed to rewarding its shareholders handsomely through dividend payments and share buybacks. In the first nine months of fiscal 2025, the company distributed dividends totaling $48 million, up 10.9% year over year. It repurchased shares worth $200 million in the same period. TTEK hiked the dividend rate by 16.7% in May 2025.
Price Performance of TTEK
In the past six months, shares of this Zacks Rank #3 (Hold) company have gained 26.2% compared with the industry’s 24.6% growth.
However, Tetra Tech has been dealing with the adverse impacts of high costs. The company's total cost of sales (including subcontractor costs and other costs of revenues) increased 6.9% in the first nine months of fiscal 2025 due to rising input costs. Also, its selling, general and administrative expenses remained high at $255 million in the first nine months of the fiscal 2025. Escalating costs pose a threat to the bottom line.
High debt levels are concerning for Tetra Tech as they raise financial obligations and may drain its profitability. The company exited third-quarter fiscal 2025 with a long-term debt of $862.5 million compared with $764.2 million reported at the end of the second quarter of fiscal 2025. The increase in its debt level was primarily attributable to the funds raised for the SAGE acquisition. Its overall current liabilities were $1.38 billion, much higher than the cash equivalents of $242.8 million.
Stocks to Consider
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Atmus Filtration Technologies Inc. (ATMU - Free Report) currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATMU delivered a trailing four-quarter average earnings surprise of 11.8%. In the past 60 days, the Zacks Consensus Estimate for Atmus Filtration’s 2025 earnings has increased 3.6%.
Donaldson Company, Inc. (DCI - Free Report) presently carries a Zacks Rank of 2. The company delivered a trailing four-quarter average earnings surprise of 1%.
In the past 60 days, the consensus estimate for DCI’s fiscal 2026 earnings has increased 4.1%.
DNOW Inc. (DNOW - Free Report) presently carries a Zacks Rank of 2. DNOW delivered a trailing four-quarter average earnings surprise of 44.1%.
In the past 60 days, the consensus estimate for DNOW’s 2025 earnings has increased 9.2%.