California-based consulting, engineering and technical service
Tetra Tech Inc.
) is set to report its second-quarter fiscal 2013 results on May
1. In the last quarter Tetra Tech posted earnings of 41 cents, in
line with the Zacks Consensus Estimate. Let's see how things are
shaping up for this quarter.
Factors to Consider This Quarter
Recently Tetra Tech revealed its lower earnings expectation
for the second half of fiscal 2013. The primary reason behind
this projection is the company's poor performance in Eastern
Earlier, Tetra Tech estimated its revenue to be in the range
of $500 million to $550 million for the second quarter net of
subcontractor cost. Although the company reaffirmed this
guidance, it anticipates a lower figure for the second half of
the year. On the whole, the weak business in the Canadian regions
and poor performance in the mining segment are expected to impact
the operating income by $20 to $30 million in second half.
Tetra Tech derives a major portion of its revenue from the
U.S. federal government agencies. The current economic condition
is largely responsible for reduction in revenue from the U.S.
Moreover, a delay in the U.S. government's budget process and
a deficit budget, which affected the procurement of its services,
have left an adverse impact on its future revenues. In addition,
there has been an ongoing government investigation into
corruption charges pertaining to the political sphere in Quebec.
This is also delaying the company's revenue recovery process and
adversely affecting its results.
Our proven model does not conclusively show that Tetra Tech is
likely to beat earnings this quarter. This is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not
the case for Tetra Tech as discussed hereunder.
Negative Zacks ESP:
Most Accurate Estimate for Tetra Tech stands at $0.39 while the
Zacks Consensus Estimate is higher at $0.40. There is a
difference of -2.50%.
Zacks Rank #4 (Sell):
Tetra Tech currently has a Zacks Rank #4 (Sell). We caution
against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks)
going into the earnings announcement, especially when the company
is seeing a negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies operating in the same sector
that have the right combination of elements to post an earnings
beat this quarter:
DXP Enterprises Inc.
Earnings ESP of +8.05% and a Zacks Rank #1 (Strong Buy).
CNH Global NV
) - Earnings ESP of +3.45% and a Zacks Rank #2 (Buy).
Earnings ESP of +14.39% and a Zacks Rank #2 (Buy).
CNH GLOBAL NV (CNH): Free Stock Analysis
DXP ENTERPRISES (DXPE): Free Stock Analysis
TETRA TECH NEW (TTEK): Free Stock Analysis
WORTHINGTON IND (WOR): Free Stock Analysis
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