Tetra Tech has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 14.4% to $33.80 per share while the index has gained 18.8%.
Is now a good time to buy TTEK? Find out in our full research report, it’s free.
Why Does TTEK Stock Spark Debate?
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.
Two Things to Like:
1. Skyrocketing Revenue Shows Strong Momentum
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Tetra Tech grew its sales at an exceptional 14% compounded annual growth rate. Its growth beat the average business services company and shows its offerings resonate with customers.
2. Surging Backlog Locks In Future Sales
Investors interested in Industrial & Environmental Services companies should track backlog in addition to reported revenue. 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 $4.28 billion in the latest quarter, and over the last two years, its year-on-year growth averaged 10.2%. This performance was impressive 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. 
One Reason to be Careful:
EPS Took a Dip Over the Last Two Years
Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.
Sadly for Tetra Tech, its EPS declined by 15.5% annually over the last two years while its revenue grew by 15.8%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Tetra Tech has huge potential even though it has some open questions, but at $33.80 per share (or 22.7× forward P/E), is now the right time to buy the stock? See for yourself in our comprehensive research report, it’s free.
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