Tetra Tech (TTEK) Showing Signs Of Perilous Reversal Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified Tetra Tech ( TTEK) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tetra Tech as such a stock due to the following factors:

  • TTEK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $15.4 million.
  • TTEK has traded 189,127 shares today.
  • TTEK is down 3.7% today.
  • TTEK was up 11.4% yesterday.

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More details on TTEK:

Tetra Tech, Inc., together with its subsidiaries, provides consulting, engineering, program management, construction management, and technical services for water, environment, energy, infrastructure, and natural resources sectors. The stock currently has a dividend yield of 1.1%. TTEK has a PE ratio of 14.8. Currently there are 5 analysts that rate Tetra Tech a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Tetra Tech has been 402,700 shares per day over the past 30 days. Tetra Tech has a market cap of $1.5 billion and is part of the services sector and diversified services industry. The stock has a beta of 1.31 and a short float of 3.4% with 2.82 days to cover. Shares are down 8.9% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Tetra Tech as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including poor profit margins, unimpressive growth in net income and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:
  • TTEK's debt-to-equity ratio is very low at 0.26 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 1.83, which demonstrates the ability of the company to cover short-term liquidity needs.
  • TTEK, with its decline in revenue, slightly underperformed the industry average of 1.0%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of TETRA TECH INC has not done very well: it is down 15.88% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • The gross profit margin for TETRA TECH INC is currently extremely low, coming in at 12.36%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 3.36% is above that of the industry average.

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