Tetra Tech Wins $45M Five-Year Contract From Federal Client

Tetra Tech, Inc. (NASDAQ:TTEK) announced that it secured an architect-engineer contract from the U.S. Army Corps of Engineers, Transatlantic Middle East District (TAM). The five-year contract was valued at $45 million.

It is worth mentioning here that Tetra Tech’s shares have gained 1.16% yesterday, ending the trading session at $87.10.

Inside the Headlines

Notably, the company will provide services, including planning, program development, design generation and construction. These services will be vital in upgrading existing facilities and constructing state-of-the-art facilities for the federal agency.

The aforementioned contract will help Tetra Tech strengthen its existing business in the Middle East. In July 2019, the company won a similar architect-engineer contract valued at $46 million from the U.S. Army Corps of Engineers, Transatlantic Middle East District.

Tailwinds

We believe that order wins, especially from the U.S. federal government agencies, will be beneficial for the company in the quarters ahead. At the end of the fourth quarter of fiscal 2019 (ended Sep 29, 2019), it had solid backlog of $3,092 million, reflecting year-over-year growth of 16.1%.

Of several federal contracts, Tetra Tech secured a $40-million contract from the U.S. Army Corps of Engineers (“USACE”) and a $500-million contract from the U.S. Agency for International Development (“USAID”) in October 2019. Also, the company secured a $48-million contract from USAID in September 2019.

For fiscal 2020 (ending September 2020), Tetra Tech anticipates sales from the U.S. federal clients to increase 5-10% on growth in the U.S. federal budget.

Zacks Rank, Price Performance and Earnings Estimates

Currently, the company has a market capitalization of $4.7 billion and a Zacks Rank #3 (Hold). Tetra Tech gains from strengthening business in Europe and the U.K., acquired assets, and shareholder-friendly policies. However, woes related to the U.S. federal business, high costs, geopolitical issues and unfavorable movements in foreign currencies remain concerning.

In the past three months, Tetra Tech’s share price has increased 6.1% compared with the industry’s growth of 5.5%.

Also, the company’s earnings estimates for fiscal 2020 and fiscal 2021 (ending September 2021) have been revised upward in the past 60 days, reflecting positive sentiments about its growth prospects. Currently, the Zacks Consensus Estimate for its earnings is pegged at $3.43 for fiscal 2020 and $3.72 for fiscal 2021, mirroring growth of 0.3% and 2.8% from the respective 60-day-ago figures.

Tetra Tech, Inc. Price and Consensus