Tetra Tech, Inc. (TTEK - Free Report) recently secured a $100-million, multiple-award architect-engineer (A-E) services contract from the U.S. Army Corps of Engineers (USACE). Per the five-year deal, the company will provide its state-of-the-art solutions in the Republic of Korea.
USACE is a specialized U.S. federal group headed by the Department of Defense. It is an important Army command agency, consisting of nearly 37,000 military and civilian personnel. The Far East District is one among the four districts guided by the USACE’s Pacific Ocean Division. It provides essential public engineering services to strengthen the security of the United States and hence, helps lower disaster risks.
Tetra Tech stated that the aforementioned contract will aid in improving the efficiency of the Far East District’s operations, and will remarkably help enhance security and peace in the Pacific region.
Per the deal, Tetra Tech will provide A-E technical services to support the U.S. Air Force, Army, and other federal agencies in the Republic of Korea. In sync with this, the company will conduct site investigations and also prepare specialized engineering studies, full design documents, and conceptual designs across the region.
Moreover, certain construction management and planning services would be provided to the Far East District of the USACE. Under this, Tetra Tech will work on the USACE projects which deal with innovating new structures or improving the existing infrastructure in the region. In addition to these, the company will improve the resilience and sustainability in the designs of these projects, as well as add certain Leadership in Environmental Engineering and Design (LEED) features to the same.
Over the past six months, Tetra Tech’s shares have rallied 16.6%, outperforming 12.7% growth recorded by the industry it belongs to.
The company is poised to grow on the back of solid end-market sales, strategic restructuring moves and diligent cost-saving initiatives.
Nevertheless, escalating cost remains a key cause of concern for this Zacks Rank #3 (Hold) stock. The company is highly sensitive to the cyclical fluctuations of the global mining and oil & gas industries. Also, on an Enterprise Value/EBITDA basis, the stock looks overvalued compared to its industry with respective tallies of 14.7x and 9.8x for the past three-month period.
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