Robert W. Baird Upgrades Tetra Tech (TTEK) to Outperform (Update)

Update (9:45 a.m.): Updated with Friday market open information.

NEW YORK (TheStreet) -- Robert W. Baird upgraded Tetra Tech (TTEK) to "outperform" from "neutral" and set a target price of $36. The firm cited the company's strong cash flow generation and potential to improve leverage as the reasons for the upgrade.

The stock was rising 0.76% to $29.16 shortly after the market opened on Friday.

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Separately, TheStreet Ratings team rates TETRA TECH INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate TETRA TECH INC (TTEK) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TTEK's debt-to-equity ratio is very low at 0.21 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, TTEK has a quick ratio of 1.69, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.8%. Since the same quarter one year prior, revenues slightly dropped by 2.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • TETRA TECH INC's earnings per share declined by 17.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TETRA TECH INC swung to a loss, reporting -$0.03 versus $1.63 in the prior year. This year, the market expects an improvement in earnings ($1.75 versus -$0.03).
  • In its most recent trading session, TTEK has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Commercial Services & Supplies industry. The net income has decreased by 17.2% when compared to the same quarter one year ago, dropping from $30.43 million to $25.20 million.
  • You can view the full analysis from the report here: TTEK Ratings Report

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