NEW YORK ( TheStreet) -- Tetra Tech (Nasdaq: TTEK) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 0.0%. Since the same quarter one year prior, revenues rose by 29.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Although TTEK's debt-to-equity ratio of 0.14 is very low, it is currently higher than that of the industry average. To add to this, TTEK has a quick ratio of 1.52, which demonstrates the ability of the company to cover short-term liquidity needs.
  • TETRA TECH INC has improved earnings per share by 15.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TETRA TECH INC reported lower earnings of $1.23 versus $1.43 in the prior year. This year, the market expects an improvement in earnings ($1.42 versus $1.23).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Commercial Services & Supplies industry and the overall market, TETRA TECH INC's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for TETRA TECH INC is rather low; currently it is at 18.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.00% trails that of the industry average.

Tetra Tech, Inc. provides consulting, engineering, program management, construction, and technical services for resource management, infrastructure, and environment in the United States and internationally. The company has a P/E ratio of 13.2, above the average diversified services industry P/E ratio of 13.1 and below the S&P 500 P/E ratio of 17.7. Tetra Tech has a market cap of $1.1 billion and is part of the services sector and diversified services industry. Shares are down 26.5% year to date as of the close of trading on Tuesday.

You can view the full Tetra Tech Ratings Report or get investment ideas from our investment research center.
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