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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.

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1.b. Last Insights on TTEK

Tetra Tech's recent momentum is driven by strong Q1 earnings, with revenue up 8% and margin expansion. The company's federal, state, and international demand remain robust, prompting a higher fiscal 2026 outlook. Additionally, the acquisition of Halvik Corp enhances Tetra Tech's high-end analytics and digital solutions capabilities, expanding its advisory services portfolio. Improved cash generation and steady backlog also contribute to the company's positive trajectory, despite a lengthy U.S. government shutdown during the quarter.

1.c. Company Highlights

2. Tetra Tech's Strong Q1 2026 Earnings: A Closer Look

Tetra Tech reported an 8% revenue growth and a 140 basis point expansion in margins on a GAAP basis, driven by its focus on enduring markets like water supply, water treatment, flood control, and environmental stewardship. The company's earnings per share (EPS) came in at $0.35, beating analyst estimates of $0.31. The company's government services segment delivered a strong quarter with margins of 18%, while the commercial and international group segment reported a revenue growth of 10% driven by water programs in the UK and Ireland.

Publication Date: Feb -04

📋 Highlights
  • Revenue and Margin Growth:: Tetra Tech reported an 8% revenue growth and 140 basis point expansion in GAAP margins.
  • Government Services Margin:: Government services segment achieved 18% margins, driven by work with the US Army Corps of Engineers.
  • Commercial & International Growth:: 10% revenue growth in commercial and international segments, fueled by water programs in the UK and Ireland.
  • Updated Full-Year Guidance:: FY2026 revenue guidance raised to $4.15B–$4.3B, with adjusted EPS of $1.46–$1.56.
  • Major Contract Win:: Secured a $48 million contract for Texas Coastal Protection Program, supporting one of the world’s largest surge barriers.

Segment Performance

The company's US federal work grew by 7% primarily due to work with the US Army Corps of Engineers, while US state and local markets continued to be strong with a 10% growth rate driven by municipal water treatment and digital water modernization. The company's backlog held steady during the strong revenue quarter, with a higher quality of backlog measured by the proportion of front-end work and higher embedded margins.

Financial Highlights

Steve Burdick, Chief Financial Officer, highlighted a 12% increase in operating income and a 140 basis point increase in EBITDA margin to 14.2%. Tetra Tech's net debt was $565 million, and the net debt on EBITDA was at a leverage of 0.86 times, 20% lower than the previous year. The company's strong balance sheet and healthy cash flows provide significant room to use its balance sheet for investing in growth and providing higher returns to shareholders.

Outlook and Guidance

Tetra Tech expects the pace of US federal orders to increase beginning late in the second quarter and continuing through the second half of the fiscal year. The company has guided for a net revenue range of $975 million to $1.025 billion for the second quarter, with associated adjusted earnings per share of $0.30 to $0.33. For the entire year, the updated and increased guidance for net revenue is a range of $4.15 billion to $4.3 billion, with associated adjusted earnings per share of $1.46 to $1.56.

Valuation

With a P/E Ratio of 28.89 and an EV/EBITDA of 16.1, Tetra Tech's valuation appears to be reasonably priced considering its strong growth prospects. Analysts estimate next year's revenue growth at 6.5%, which suggests that the company's current valuation is justified. The company's return on equity (ROE) of 20.29% and return on invested capital (ROIC) of 11.61% also indicate a strong ability to generate returns for shareholders.

3. NewsRoom

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Principal Financial Group Inc. Cuts Stake in Tetra Tech, Inc. $TTEK

Feb -09

Source: defenseworld.net

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Tetra Tech Q1 Earnings Call Highlights

Jan -31

Source: defenseworld.net

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Tetra Tech (NASDAQ:TTEK) Sets New 12-Month High Following Earnings Beat

Jan -30

Source: defenseworld.net

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Tetra Tech, Inc. (TTEK) Q1 2026 Earnings Call Transcript

Jan -29

Source: seekingalpha.com

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Tetra Tech Surpasses Q1 Earnings & Revenues Estimates, Raises 26' View

Jan -29

Source: zacks.com

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Tetra Tech (TTEK) Surpasses Q1 Earnings and Revenue Estimates

Jan -29

Source: zacks.com

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Tetra Tech Acquires Halvik Corp

Jan -22

Source: businesswire.com

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Asset Management One Co. Ltd. Reduces Position in Tetra Tech, Inc. $TTEK

Jan -09

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

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Granite Construction

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Growth: 7.9

Quality: 4.7

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Momentum: 7.0

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Quality: 5.7

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Growth: 9.8

Quality: 7.2

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A-Score: 5.1/10

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Growth: 8.7

Quality: 7.3

Yield: 0.0

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A-Score: 5.0/10

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Growth: 9.4

Quality: 7.1

Yield: 0.0

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Tetra Tech

A-Score: 4.7/10

Value: 3.1

Growth: 7.3

Quality: 6.0

Yield: 1.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

36.69$

Current Price

36.7$

Potential

-0.00%

Expected Cash-Flows