Tetra Tech beats Q3 revenue estimates on federal and international growth, raises FY adjusted EPS guidance

Overview

• US engineering services firm's Q3 revenue beat analyst expectations

• EPS for Q3 was $0.42; backlog rose 5% sequentially

• Company raised FY26 guidance and repurchased $100 mln in stock

Outlook

• Tetra Tech expects Q4 net revenue between $1.12 bln and $1.17 bln

• Company sees Q4 EPS between $0.45 and $0.48

• Tetra Tech raises FY26 adjusted EPS guidance to $1.56-$1.59

• Company narrows FY26 net revenue guidance to $4.315 bln-$4.365 bln

Result Drivers

• FEDERAL AND INTERNATIONAL GROWTH - Co said Q3 growth was primarily driven by double-digit increases in U.S. federal and international end markets

• NEW ORDERS - Significant new orders, including commercial contracts for data center and sediment restoration projects, contributed to backlog increase

• STRONG CASH FLOW - Management attributed record cash flow to ability to generate more cash than net income, supporting acquisitions, buybacks, and dividends

Company press release: ID:nBwc18QrMa

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", 3 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the environmental services equipment peer group is "buy"

• Wall Street's median 12-month price target for Tetra Tech Inc (Delaware) is $42.00, about 25.3% above its July 28 closing price of $33.51

• The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 19 three months ago

Reuters Recommended Reads

• July 29 - Parsons Q2 revenue misses estimates on portfolio restructuring charges

• July 29 - CBRE raises profit forecast as data center expansion boosts real estate services demand

• July 29 - Ireland's Johnson Controls Q3 sales beat on data center demand; raises outlook

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)