NEW YORK ( TheStreet) -- Tetra Tech (Nasdaq: TTEK) has been upgraded by TheStreet Ratings from hold to buy. 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, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 4.5%. 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.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has significantly increased by 127.70% to $55.76 million when compared to the same quarter last year. In addition, TETRA TECH INC has also vastly surpassed the industry average cash flow growth rate of -9.29%.

Tetra Tech, Inc. provides consulting, engineering, program management, construction management, and technical services for resource management and infrastructure markets in the United States and internationally. The company has a P/E ratio of 15.9, above the average diversified services industry P/E ratio of 15.4 and below the S&P 500 P/E ratio of 17.7. Tetra Tech has a market cap of $1.4 billion and is part of the services sector and diversified services industry. Shares are down 7.4% year to date as of the close of trading on Friday.

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