Tetra Tech Inc

Tetra Tech Inc earns a 5-star quantitative star rating, indicating our belief that this share class offers a compelling opportunity for investors. The stock currently trades at a 17% discount to our quantitative fair value estimate of $40.40 per share, which is reinforced by this estimate's low uncertainty rating.

The firm's solid growth increases our estimated valuation. Consistent revenue and earnings growth indicates a company's potential for increased market share and profitability. Reflecting the firm's growth is its EPS 5-year growth of 17.0%, which lies in the top 30% compared with peers globally. The robust five-year track record of EPS growth is reason to be optimistic about the firm's shares. We believe this is a sign that shares could be cheap.

Conversely, the company's valuation metrics are potentially concerning. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. The firm's enterprise value to market value ratio of 1.1, a core component of valuation, sits in the top 45% globally. The market value of equity is low relative to the business' enterprise value, suggesting the company could be buried in debt if anything goes wrong. Despite our favorable price/fair value ratio, this characteristic is a negative attribute.

The company's narrow quantitative moat rating indicates it could outearn its cost of capital and maintain robust margins for 10 years or longer. In addition, the company's moderate financial health score is decent and doesn't seriously concern us with regard to financial distress.