Tetra Tech Q4 Earnings: Can NasdaqGS:TTEK Hit Its $0.81 EPS Target?

in EARNINGS/INVESTING IDEAS by

Tetra Tech, Inc. (NasdaqGS:TTEK) is scheduled to report Q4 earnings results after markets close for trading on November 11, 2020.

The company is expected to report earnings of $0.81/share on revenue of $589.9 million. The consensus earnings per share (EPS) of $0.81/share is based on a poll of 6 analysts and represents a decline in eps of −8.1% over the same quarter last year, when the company reported earnings of $0.88/share.

The revenue forecast of $589.9 million based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −7.9%. Last year the company reported $640.2 million in revenue for the quarter.

Expected to report EPS contraction of −8.1% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $589.86 $640.18 −7.9%
EPS $0.81 $0.88 −8.1%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Tetra Tech, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $0.73 $0.78 7.3% Beat
Q2, 2020 $0.71 $0.73 3.1% Beat
Q1, 2020 $0.77 $0.84 9.3% Beat
Q4, 2019 $0.84 $0.88 5.0% Beat
Q3, 2019 $0.80 $0.89 11.5% Beat
Q2, 2019 $0.64 $0.70 10.2% Beat
Q1, 2019 $0.62 $0.70 12.2% Beat
Q4, 2018 $0.74 $0.75 1.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 28, 2020, the stock price reacted by increasing 4.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $85.98 $89.83 4.5% Increase
April 29, 2020 $79.14 $75.28 −4.9% Decline
January 29, 2020 $89.56 $88.79 −0.9% Decline
November 13, 2019 $87.12 $86.35 −0.9% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.55, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.55 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Tetra Tech, Inc. is currently trading at $116.85/share, up 6.6% for the day. The company is trading at approximately 100.0% of its 52-week high of $113.45/share. The company’s stock price is up 30.1% since the last earnings report and up 10.2% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 65.03 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:TTEK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 45.05 and a forward P/E multiple of 33.86.

Tetra Tech, Inc.’s current share price also implies a price-to-book (P/B) multiple of 6.39. The following table summarizes some other key fundamental ratios:

Data as of November 9, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 28, 2020
Stock Price (Current) $116.85
P/E Ratio 45.0x
P/E Ratio (Fwd) 33.9x
PEG Ratio −2.2
Total Debt / Total Capital 8.6%
Levered Free Cash Flow $274.1 million
EV / EBITDA 28.2x

Finbox

Tetra Tech, Inc. is a mid-cap stock with a market capitalization of $5.908 billion and a total enterprise value of $6.322 billion. The company operates in the Industrials sector and the Commercial Services & Supplies industry.

Tetra Tech, Inc. provides consulting and engineering services worldwide. It operates through Government Services Group (GSG) and Commercial/International Services Group (CIG) segments. The GSG segment offers early data collection and monitoring, data analysis and information technology, science and engineering applied research, engineering design, construction 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, construction management, and operations and maintenance services. This segment serves natural resources, energy, and utilities markets, as well as civil infrastructure master planning and engineering design markets. Tetra Tech, Inc. was founded in 1966 and is headquartered in Pasadena, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.