Tetra Tech Boosts Design Capabilities With Glumac Buyout

Tetra Tech Inc. TTEK has acquired leading sustainable infrastructure design firm, Glumac, as it seeks to broaden its high-end sustainable infrastructure design capabilities.

Glumac uses innovative sustainable technologies and solutions in its designs, including the design and engineering of Leadership in Energy and Environmental Design (LEED) standard and Net-Zero infrastructure. Customers, these days, are increasingly interested in sustainable infrastructure solutions.

Glumac focuses on cost-effective, sustainable design for a wide range of projects — including sustainable design, building engineering and energy analysis. The acquisition will enable Tetra Tech to offer additional technically-differentiated green infrastructure capabilities which will help its clients conserve resources and optimize operating costs.

Tetra Tech’s in-depth engineering capabilities will complement Glumac’s offerings and enable the former to provide industry-leading technical solutions.

Tetra Tech is bullish about its growth across all four client sectors, namely the U.S. federal, the U.S. state and local, the U.S. commercial work and finally international. Over the past year, Tetra Tech’s shares have returned 34.9%, outperforming the industry’s average gain of 20.9%.

Further, the budget for the Department of Defense has recently been raised by $15 billion, providing the company even more opportunities. Also, early indications suggest that the budget may increase again in 2018.Should this authorization pass, the company can likely win a string of new task orders for upgrades, design projects and accelerated cleanups.

However, sluggish oil and gas markets, and a very competitive bidding environment (particularly in Canada) have restricted this Zacks Rank #4 (Sell) company’s top-line growth in recent times.

Looking forward, oil and gas revenues, largely in Canada, are expected to reduce about 65% in the second half of fiscal 2017.Thus, we believe depressed oil and gas prices will continue to play a spoilsport for the company’s revenues in the oil and gas midstream services business.

Stocks to Consider

Better-ranked stocks in the broader space include Kennametal Inc. KMT, Lincoln Electric Holdings, Inc. LECO and Stanley Black & Decker, Inc. SWK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Kennametal generated two beats over the trailing four quarters, for an average positive surprise of 4%.

Lincoln Electric has a solid earnings surprise history for the trailing four quarters, having beaten estimates thrice for an average of 5.5%.

Stanley Black & Decker also has an impressive earnings surprise history, with an average beat of 4.3% over the trailing four quarters, beating estimates all through.

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