Tetra Tech Inc.’s TTEK financial stability is challenged by escalating operating costs and expenses and high debt levels. Also, given the company’s extensive international presence, foreign currency headwind is an added uncertainty.

Headquartered in Pasadena, CA, Tetra Tech is a leading provider of consulting, construction management, engineering, program management and technical services. It serves clients by providing cost-effective and innovative solutions for dealing with the fundamental needs for water, environmental and alternative energy services.

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Tetra Tech currently carries a Zacks Rank #4 (Sell). In the past year, the stock has lost 15% compared with the industry’s 2.7% decline.

High Costs:  Tetra Tech is plagued by rising costs and expenses. The company's total cost of sales increased 15.5% in the first quarter of fiscal 2025 (ended Dec. 29, 2024) due to rising input costs. Also, its selling, general and administrative expenses increased 5.7% year over year in the fiscal first quarter due to rising marketing costs. Escalating costs pose a threat to the bottom line.

Increasing Debt Level: High debt levels may raise TTEK’s financial obligations and drain its profitability. Tetra Tech’s long-term debt in the last five years (2020-2024) increased 29.7% (CAGR). The company exited first-quarter fiscal 2025 with a long-term debt of $889 million. Its overall current liabilities were $1.3 billion, higher than the cash equivalents of $248.1 million.

Risks Related to Government Contracts: The company generates a significant portion of its revenues from U.S. federal, state and local contracts, which are typically multi-year agreements. Any changes in the terms, clauses or funding of these contracts could negatively impact the business. The company's services in the cyclical mining and oil & gas industries are vulnerable to economic downturns, with fluctuating metal prices potentially leading to project cancellations or reductions from its mining clients.

Forex Woes: TTEK operates across international locations, which exposes it to certain political, environmental and geopolitical issues, as well as currency translation risks. This could affect its performance in the quarters ahead. A stronger U.S. dollar is likely to depress the company's overseas business results in the quarters ahead.

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RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.2%.

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In the past 60 days, the consensus estimate for ENS’ fiscal 2025 earnings has increased 10%.

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In the past 60 days, the consensus estimate for AIT’s fiscal 2025 earnings has inched up 1.4%.

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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report

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