Download PDF

1. Company Snapshot

1.a. Company Description

Tetra Tech, Inc.provides consulting and engineering services worldwide.The company operates through two segments Government Services Group (GSG) and Commercial/International Services Group (CIG).


The GSG segment offers early data collection and monitoring, data analysis and information management, science and engineering applied research, engineering design, project management, and operations and maintenance services; and climate change and energy management consulting, as well as greenhouse gas inventory assessment, certification, reduction, and management services.This segment serves federal, state, and local governments, and development agencies in water resources analysis and water management, environmental monitoring, data analytics, government consulting, waste management, and a range of civil infrastructure master planning and engineering design markets.The CIG segment provides early data collection and monitoring, data analysis and information management, feasibility studies and assessments, science and engineering applied research, engineering design, project management, and operations and maintenance services.


This segment serves natural resources, energy, and utilities markets, as well as sustainable infrastructure master planning and engineering design markets.Tetra Tech, Inc.was founded in 1966 and is headquartered in Pasadena, California.

Show Full description

1.b. Last Insights on TTEK

Tetra Tech's recent performance faced negative drivers, including rising costs and currency headwinds. Despite beating Q4 earnings and revenue estimates with $0.45 per share, a 14.5% increase year-over-year, the company's lower backlog tempered its fiscal 2026 outlook. Additionally, significant shareholders, such as Y Intercept Hong Kong Ltd and Sarasin & Partners, reduced or sold their holdings. However, the company secured a £17 million water engineering design contract and posted growth across its Government Services Group and Commercial and Industrial Group segments.

1.c. Company Highlights

2. Tetra Tech's Record Financial Performance Driven by Strong Segment Growth

Tetra Tech reported a record financial performance for the fourth quarter and fiscal year 2025, with net revenue reaching $1.07 billion, up 10% from the prior year, and operating income of $168 million, up 23%. Earnings per share grew 29% to $0.44 for the quarter, with the actual EPS coming in at $0.45, beating estimates of $0.4. The Government Services Group (GSG) segment revenue grew 17% to $396 million, with a record margin performance of 22.9%, while the Commercial/International Group's revenue was up 7% to $676 million. The company's EBITDA margins expanded by 80 basis points to 14.3% for the fiscal year.

Publication Date: Nov -16

📋 Highlights
  • Record Q4 Revenue Growth:: Net revenue hit $1.07 billion, up 10% YoY, with operating income rising 23% to $168 million.
  • GSG Segment Outperformance:: Government Services revenue surged 17% to $396 million, achieving a record 22.9% margin.
  • Strong Cash Flow Generation:: Operating cash flow reached $458 million, up 28% YoY, amid $4.14 billion in total backlog.
  • Dividend & Buybacks:: Quarterly dividend increased 12%, and $250 million in shares were repurchased in 2025.
  • 2026 Guidance:: Revenue projected at $4.05–$4.25 billion, with EPS guidance of $1.40–$1.55, reflecting 7.5–12.5% growth across key markets.

Segment Performance and Growth Drivers

The company's strong performance was driven by its focus on high-end consulting and water services. The GSG segment's margin expansion was driven by high utilization due to disaster response work, a shift to more fixed-price work, and a favorable project mix. The company's President highlighted growth drivers for fiscal year 2026 and beyond, including investments in data centers, defense, and water infrastructure. The data center market is expected to drive growth, with estimates of $1 trillion to be invested over the next 10 years, and Tetra Tech already holds contracts with major data center operators.

Valuation and Growth Prospects

With a P/E Ratio of 38.32 and an EV/EBITDA of 22.87, the market is pricing in significant growth expectations. The company's guidance for fiscal year 2026 is net revenue of $4.05 billion to $4.25 billion, implying 7.5% growth for international, U.S. commercial, and U.S. government, and 12.5% for municipal. Analysts estimate next year's revenue growth at -7.9%, but the company's strong backlog and growth drivers provide a positive outlook. The company's ROE of 14.6% and ROIC of 9.03% indicate a strong return on equity and invested capital.

Capital Allocation and M&A Strategy

Tetra Tech's capital allocation focus is on M&A, particularly in the medium-sized range, with a pipeline of opportunities that meet their criteria having grown. The company has a strong balance sheet and access to various capital markets and funding vehicles to make acquisitions. The CEO, Dan Batrack, expects M&A to become a bigger part of the company's strategy, but it won't put additional pressure on organic growth targets, which are 6-10%. The company's low cost of capital, with a 2% interest rate, allows them to make acquisitions at attractive multiples.

Dividend and Shareholder Returns

The company announced a 12% increase in its quarterly dividend and bought back $250 million in stock in 2025. The Dividend Yield is currently at 0.68%, providing a relatively stable source of return for shareholders. The company's Free Cash Flow Yield is 4.61%, indicating a healthy cash generation capability.

3. NewsRoom

Card image cap

Tetra Tech Selected for Resilient Energy Infrastructure Framework

Dec -04

Source: businesswire.com

Card image cap

Tetra Tech, Inc. $TTEK Shares Sold by Fisher Asset Management LLC

Dec -03

Source: defenseworld.net

Card image cap

American Rare Earths deepens Tetra Tech alliance to target US funding for Halleck Creek

Nov -20

Source: proactiveinvestors.com

Card image cap

Tetra Tech Q4 Earnings & Revenues Top Estimates, Increase Y/Y

Nov -17

Source: zacks.com

Card image cap

Tetra Tech, Inc. (TTEK) Q4 2025 Earnings Call Transcript

Nov -13

Source: seekingalpha.com

Card image cap

Tetra Tech (TTEK) Beats Q4 Earnings and Revenue Estimates

Nov -13

Source: zacks.com

Card image cap

Here's What to Note Ahead of Tetra Tech's Q4 Earnings Release

Nov -11

Source: zacks.com

Card image cap

Y Intercept Hong Kong Ltd Sells 39,444 Shares of Tetra Tech, Inc. $TTEK

Nov -06

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.91%)

6. Segments

Commercial/International Services Group

Expected Growth: 4.5%

Tetra Tech's Commercial/International Services Group's 4.5% growth is driven by increasing demand for sustainable infrastructure, renewable energy, and environmental consulting services. Strong project execution, strategic acquisitions, and expansion into emerging markets also contribute to growth. Additionally, government initiatives and private sector investments in infrastructure development and environmental remediation support segment growth.

Government Services Group

Expected Growth: 5.5%

Tetra Tech's Government Services Group growth is driven by increasing federal and state government spending on infrastructure, environmental, and energy projects. Strong demand for consulting services in water, transportation, and defense sectors also contributes to growth. Additionally, the group's expansion into emerging markets and strategic acquisitions further support the 5.5% growth rate.

Elimination of Inter-segment

Expected Growth: 0.0%

Tetra Tech, Inc.'s elimination of inter-segment revenue indicates a flat growth rate of 0.0%. This is driven by the company's focus on consolidating its business segments, reducing internal transactions, and streamlining operations. The lack of growth is also attributed to the absence of significant acquisitions or divestitures, as well as a stable market environment with no major disruptions.

7. Detailed Products

Water Management

Tetra Tech provides water management services to help clients manage water resources, including water supply planning, water treatment, and wastewater management.

Environmental Remediation

Tetra Tech offers environmental remediation services to assess and clean up contaminated sites, including soil and groundwater remediation.

Infrastructure Services

Tetra Tech provides infrastructure services, including design, construction, and operation of infrastructure projects, such as transportation systems, buildings, and utilities.

Resource Management

Tetra Tech offers resource management services, including natural resource management, forestry, and land use planning.

Energy Services

Tetra Tech provides energy services, including energy efficiency, renewable energy, and energy infrastructure development.

Geospatial Technology

Tetra Tech offers geospatial technology services, including mapping, surveying, and geographic information systems (GIS).

International Development

Tetra Tech provides international development services, including project management, technical assistance, and capacity building.

8. Tetra Tech, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Tetra Tech, Inc. faces moderate threat from substitutes due to the availability of alternative environmental consulting services.

Bargaining Power Of Customers

Tetra Tech, Inc. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Tetra Tech, Inc. relies on a network of suppliers for equipment and services, but has some flexibility to switch suppliers if needed.

Threat Of New Entrants

The environmental consulting industry has high barriers to entry, making it difficult for new entrants to compete with established players like Tetra Tech, Inc.

Intensity Of Rivalry

The environmental consulting industry is highly competitive, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 43.70%
Debt Cost 6.27%
Equity Weight 56.30%
Equity Cost 8.55%
WACC 7.55%
Leverage 77.61%

11. Quality Control: Tetra Tech, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Granite Construction

A-Score: 5.8/10

Value: 4.5

Growth: 7.9

Quality: 4.8

Yield: 1.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

View Full Report
Stock-Card
Primoris Services

A-Score: 5.2/10

Value: 3.4

Growth: 8.6

Quality: 4.7

Yield: 0.0

Momentum: 10.0

Volatility: 4.7

1-Year Total Return ->

View Full Report
Stock-Card
IES Holdings

A-Score: 5.2/10

Value: 2.2

Growth: 9.7

Quality: 7.1

Yield: 0.0

Momentum: 9.5

Volatility: 2.7

1-Year Total Return ->

View Full Report
Stock-Card
Comfort Systems USA

A-Score: 5.2/10

Value: 1.2

Growth: 9.8

Quality: 7.2

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
Sterling Infrastructure

A-Score: 5.1/10

Value: 1.5

Growth: 8.7

Quality: 7.3

Yield: 0.0

Momentum: 9.5

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
Tetra Tech

A-Score: 4.3/10

Value: 3.0

Growth: 7.3

Quality: 5.5

Yield: 1.0

Momentum: 1.0

Volatility: 8.0

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

34.14$

Current Price

34.14$

Potential

-0.00%

Expected Cash-Flows