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Tetra Tech to Benefit from Solid Traction Across Markets


On Oct 8, we issued an updated research report on Tetra Tech, Inc. TTEK.

In the past six months, this Zacks Rank #1 (Strong Buy) stock has yielded a return of 38.5% compared with the industry’s growth of 27.0%.

Existing Scenario

Tetra Tech has had a solid run in the recent times, owing to its impressive top-line growth, restructuring efforts and accretive acquisitions. In a bid to maximize growth prospects, the company is currently focusing on high-end consulting and engineering services that is helping it promote its high value and high margin business, thus differentiating it from peers in the marketplace.

Also, the company remains optimistic about its growth prospects across all four client sectors: U.S. federal, U.S. state and local and U.S. commercial work along with International. Based on growth rate forecast for both the U.S. federal and the U.S. state local markets, the company federal work is likely to comprise almost a third of its business and grow at a rate of 5-10% for the rest of fiscal 2018, while work for U.S. state and local clients is expected to grow 10-15% in the period. U.S. commercial work, excluding the oil and gas sector, is expected to grow in the range of 5-10%. Such positive industry trends are likely to act as catalysts for the company’s growth in the long run.

Moreover, Tetra Tech believes that lucrative opportunities across the globe will continue to boost its international revenues. It expects international revenues to be driven by infrastructure programs and industrial studies and design work. Also, the previously completed acquisition of Coffey International is expected to boost the top line. Coffey's dominant foothold in the Asia-Pacific region has helped Tetra Tech win several new major programs together with the Australian Department of Defense.

This apart, its robust financial health and diligent capital deployment strategies signal brighter days ahead.

Other Key Picks

Some other top-ranked stocks from the same industry are Donaldson Company, Inc. DCI, Advanced Emissions Solutions, Inc. ADES and Casella Waste Systems, Inc. CWST. While Donaldson and Advanced Emissions sport a Zacks Rank #1, Casella Waste Systems carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Donaldson surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 2.29%.

Advanced Emissions outpaced estimates twice in the preceding four quarters, with an average earnings surprise of 16.40%.

Casella Waste Systemsexceeded estimates twice in the preceding four quarters, with an average positive earnings surprise of 30.53%.

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