Tetra Tech Secures $356 Million NAVTAC II Contract from FAA

Global consulting and engineering services firm, Tetra Tech, Inc. TTEK recently announced that the company has secured a five-year $356 million single-award engineering and technical support services contract with the Federal Aviation Administration (FAA).

Per the Navigation Technical Assistance Contract II (NAVTAC II), Tetra Tech will offer technical support services for research, planning, implementation, maintenance as well as decommissioning of the FAA’s landing, navigation and lighting systems. The company will offer the services over the next five years, consequently extending its relationship with the agency.

The deal will not only help FAA transition to an integrated ground and space-based navigation systems architecture, but will also support the agency’s modernization initiatives, including its Next Generation Air Transportation System effort.

 Other Major Contracts

Some other notable contracts recently clinched by the company include the $170 million worth of international development task orders, the $150 million USACE Mobile A-E contract and a $77 million FAA ASH Contract as well as another $352 million worth of commercial contracts. A solid pipeline of projects with the Department of Defense and other development-related services in the United States bode well for growth.

Existing Business Scenario

Based on continued execution of its business model, Tetra Tech remains bullish about its growth across all four client sectors, namely, U.S. federal, U.S. state and local, the U.S. commercial work and international. The company’s U.S. state and local clients — in both the municipal water as well as smart water services domains are expected to be its strongest growth drivers for the upcoming quarters.

In the past six months, this Zacks Rank #3 (Hold) company has returned 16.8%, outperforming the industry’s average gain of 10.9%. Further, steady growth in local budgets and local capital spending has been adding to its strength.

However, demand for the company’s services is cyclical, and vulnerable to economic downturns and reductions in the government and private industry spending.  Such downturns or reductions make the company vulnerable to delays in clients spending, as well as lead to the curtailing or canceling of proposed and existing projects. Moreover, fluctuations in market prices of metals, can cause its mining clients to curtail projects, consequently adding to the company’s woes.

Stocks to Consider

Some better-ranked stocks from the same space include II-VI Incorporated IIVI, AGCO Corporation AGCO and Altra Industrial Motion Corp. AIMC. While II-VI Incorporated sports a Zacks Rank #1 (Strong Buy), AGCO Corporation and Altra Industrial Motion carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

II-VI Incorporated has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 50.4%.

AGCO Corporation has outpaced estimates in the preceding four quarters, with an average earnings surprise of 39.7%.

Altra Industrial Motion has surpassed estimates in the trailing four quarters, with an average positive earnings surprise of 16.9%.

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