Pomegra
Tetra Tech shares jumped about 10% after fiscal fourth-quarter adjusted EPS of $0.49 beat the $0.47 estimate, backed by a record $4.67 billion backlog.
- Q4 adjusted EPS of $0.49 topped the $0.47 estimate, up 9% year over year.
- Backlog reached $4.67 billion, up 13%, on a quarterly book-to-bill ratio of 1.14x.
- Fiscal 2027 guidance calls for EPS of $1.65-$1.80 and net revenue of $4.425-$4.625 billion.
Lead
Tetra Tech (NASDAQ: TTEK) shares rose roughly 10% after the water and environmental consulting firm reported fiscal fourth-quarter results on November 11, 2026. Adjusted earnings per share of $0.49 exceeded the $0.47 consensus estimate. Revenue was $1.34 billion and net revenue, which excludes pass-through subcontractor costs, was $1.15 billion. Adjusted EBITDA reached $194 million, a margin of 16.8% on net revenue, up 90 basis points from a year earlier.What Did Tetra Tech Report for the Fourth Quarter?
Tetra Tech reported GAAP EPS of $0.51 and adjusted EPS of $0.49 for the quarter ended in September, with operating income of $188 million. The gap between the two measures reflects adjustments to the GAAP figure that the company strips out of its adjusted results.
For the full fiscal year, revenue totaled $5.08 billion and net revenue $4.35 billion. GAAP EPS came to $1.69 and adjusted EPS to $1.60. Adjusted EBITDA was $660 million, a 15.2% margin, also up 90 basis points. Operating cash flow rose 14% to $523 million.
Chief Executive Roger Argus pointed to rising demand for the company's "Leading with Science" technical services, the branding for its engineering and consulting work in water, environmental and infrastructure projects.
Why Did Tetra Tech Shares React So Strongly?
Shares rallied because margin expansion and a growing backlog outweighed a cautious near-term outlook. Backlog, the value of contracted work yet to be performed, rose 13% to $4.67 billion. New orders exceeded $1.6 billion in the quarter. A book-to-bill ratio of 1.14x means the company booked more work than it completed, which supports revenue visibility into fiscal 2027.
The margin trend carried equal weight. A 90 basis point gain in adjusted EBITDA margin for both the quarter and the year shows the shift toward higher-value advisory and design work is lifting profitability faster than revenue.
The first-quarter outlook was the one soft spot. Tetra Tech guided Q1 fiscal 2027 EPS to $0.36-$0.38, a midpoint of $0.37 that sits below consensus, and net revenue to $1.04-$1.08 billion. The market looked past it to the full-year range.
What Is Tetra Tech's Fiscal 2027 Outlook?
Tetra Tech expects fiscal 2027 net revenue of $4.425-$4.625 billion and EPS of $1.65-$1.80. At the midpoint, net revenue would grow about 4% from fiscal 2026 and EPS would rise roughly 8% from the $1.60 adjusted level.
The guidance varies by end market:
- U.S. commercial: revenue growth of about 10%.
- U.S. federal: growth of about 5%.
- International: growth of about 5%.
- State and local government: flat.
The commercial figure is the fastest-growing piece of the plan. It reflects corporate spending on water infrastructure, environmental compliance and power-related projects. The flat state and local forecast shows public-sector budgets remain a constraint even as federal and private demand strengthens.
How Is Tetra Tech Returning Capital?
Tetra Tech raised its quarterly dividend 11% to $0.072 per share. The company repurchased $100 million of stock during the fourth quarter and has $798 million remaining under its buyback authorization.
Dividend per share is the cash payout on each outstanding share in a period. At $0.072 quarterly, the payout remains modest relative to the company's $523 million in annual operating cash flow. That leaves room for continued repurchases and acquisitions, which have historically supplemented organic growth in the firm's consulting portfolio.
Strategic Context
Tetra Tech sells specialized consulting, engineering and technical services, with a heavy weighting toward water, environmental remediation, resilience and infrastructure. Its mix of government and commercial clients gives it exposure to long-cycle public programs and to private capital spending. The guidance suggests the commercial side is now setting the pace, while federal demand grows at a steadier rate.
The stock's move also highlights how a modest earnings beat can drive an outsized reaction when it comes with expanding margins, record backlog and a double-digit dividend increase.
Outlook
Tetra Tech enters fiscal 2027 with a $4.67 billion backlog, a higher margin base and a guidance range that implies mid-single-digit net revenue growth and high-single-digit EPS growth at the midpoint. The below-consensus first quarter sets a low bar for early-year results, while U.S. commercial demand is the main driver of the full-year plan. Conversion of backlog into revenue and any further margin gains will determine whether the company reaches the upper end of its EPS range.
