4 days ago
2 Reasons to Like TTEK and 1 to Stay Skeptical
Over the past six months, Tetra Tech's shares (currently trading at $35.32) have posted a disappointing 17.7% loss while the S&P 500 was down 1.8%. This may have investors wondering how to approach the situation.
Following the drawdown, is now the time to buy TTEK? Find out in our full research report, it's free.
With a 50-year legacy of "Leading with Science" and operations on all seven continents, Tetra Tech (NASDAQ:TTEK) provides high-end consulting and engineering services focused on water management, environmental solutions, and sustainable infrastructure for government and commercial clients worldwide.
A company's long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Tetra Tech's sales grew at an exceptional 13.2% compounded annual growth rate over the last five years. Its growth surpassed the average business services company and shows its offerings resonate with customers.
In addition to reported revenue, backlog is a useful data point for analyzing Industrial & Environmental Services companies. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Tetra Tech's future revenue streams.
Tetra Tech's backlog punched in at $4.31 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 15.6%. This performance was fantastic and shows the company has a robust sales pipeline because it is accumulating more orders than it can fulfill. Its growth also suggests that customers are committing to Tetra Tech for the long term, enhancing the business's predictability.
If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
As you can see below, Tetra Tech's margin dropped by 8.7 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Tetra Tech's free cash flow margin for the trailing 12 months was 5.1%.
Tetra Tech's positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 24.6× forward P/E (or $35.32 per share). Is now a good time to buy? See for yourself in our in-depth research report, it's free.
The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
