Trading Analysis Report: TTEK
- Analysis date: 2026-06-01
- Processed decision: Buy
- Price Target: 36
I. Analyst Team Reports
Market Analyst
Market Report
Tetra Tech (TTEK) traded at $27.49 on May 29, 2026. yfinance showed a 52-week range of $25.81-$43.14, a 50-day average of $30.12, and a 200-day average of $33.82.
The stock is still weak despite improving operating results. The local yfinance history showed a -21.3% one-year return and -18.3% YTD return.
TTEK fits the AI queue rather than the semiconductor queue. Its AI relevance comes from digital water and environmental solutions, data analytics, cloud, automation, modeling, decision-support tools, and AI/data-center-driven water infrastructure demand.
Market read: Buy with a $36 target. The target is below yfinance mean analyst target of $40.83 and median target of $40.50, but still offers meaningful upside from a depressed share price.
Sentiment Analyst
Sentiment Report
Sentiment improved after Tetra Tech's Q2 FY2026 results and raised guidance.
Q2 revenue was $1.13 billion, up 3% year over year. Q2 net revenue was $1.01 billion, up 7% year over year.
Q2 operating income was $117 million, up 18% year over year, and adjusted EBITDA was $139 million, up 14% year over year. Q2 EPS was $0.38, up 15% year over year.
Cash conversion was strong. Q2 cash flow from operations was $127 million, up 56% year over year.
Backlog was $5.64 billion, up 14% year over year. High-end water and environmental services accounted for 90% of net revenue.
Sentiment read: Buy because backlog, margin, and cash flow are improving while the stock remains below key moving averages.
News Analyst
News Report
The key current source is Tetra Tech's April 30, 2026 Q2 FY2026 results release.
The Digital Water and Environmental segment represented 35% of net revenue and delivered 29% organic net revenue growth and 37% operating income growth.
Tetra Tech said water infrastructure growth was driven by AI/data centers, advanced manufacturing, and port infrastructure. The company highlighted a $439 million West Coast port modernization program and data center cooling projects.
Management raised FY2026 guidance to net revenue of $4.34-$4.42 billion and EPS of $1.55-$1.60. Q3 FY2026 guidance calls for net revenue of $1.08-$1.13 billion and EPS of $0.40-$0.42.
News read: TTEK has visible demand from water, environmental, AI/data-center, and infrastructure projects, but it remains exposed to government funding and project execution cycles.
Fundamentals Analyst
Fundamentals Report
TTEK fundamentals are service-business fundamentals, not chip-company fundamentals.
yfinance showed market cap of approximately $7.13 billion, enterprise value of approximately $8.02 billion, total revenue of approximately $4.40 billion, operating cash flow of approximately $688.1 million, free cash flow of approximately $546.0 million, total cash of approximately $223.6 million, and total debt of approximately $1.11 billion.
The same snapshot showed revenue growth of -4.9%, gross margin of 21.8%, operating margin of 12.5%, profit margin of 10.0%, trailing P/E of 16.46x, forward P/E of 16.02x, and price/sales of 1.62x.
The FY2025 Form 10-K describes Tetra Tech as a provider of high-end consulting and engineering services focused on water, environment, and sustainable infrastructure, with Government Services and Commercial/International Services segments.
Fundamental read: Buy because the valuation is reasonable, cash generation is strong, and backlog supports revenue visibility, but debt and government contract exposure require a disciplined target.
II. Research Team Decision
Bull Researcher
Bull Research
The bull case is that Tetra Tech is a picks-and-shovels beneficiary of AI infrastructure buildout through water, environmental, permitting, digital modeling, and data center cooling demand.
Q2 net revenue rose 7%, operating income rose 18%, adjusted EBITDA rose 14%, EPS rose 15%, and operating cash flow rose 56%.
Backlog rose 14% to $5.64 billion, while management raised FY2026 guidance. Digital Water and Environmental growth was especially strong, with 29% organic net revenue growth and 37% operating income growth.
The stock is down 21.3% over one year and trades at about 16x forward earnings, which is not demanding for a company with backlog growth and AI/data-center water exposure.
Bull conclusion: TTEK can re-rate if raised guidance translates into sustained EPS and cash-flow growth.
Bear Researcher
Bear Research
The bear case is that TTEK is not a pure AI technology company and revenue growth is uneven.
yfinance showed trailing revenue growth of -4.9%, and the stock remains below both the $30.12 50-day average and $33.82 200-day average.
The 10-K risk framework includes reliance on government contracts, funding and appropriation cycles, regulatory changes, competition, project execution risk, climate/disaster response volatility, international operations, acquisitions, cybersecurity, and macroeconomic conditions.
Debt is not excessive but material. yfinance showed approximately $1.11 billion of total debt against $223.6 million of cash.
Bear conclusion: TTEK could remain range-bound if government funding, project starts, or AI/data-center water demand disappoint.
Research Manager
Research Manager Synthesis
The bull case is Q2 execution, raised FY2026 guidance, strong cash flow, 14% backlog growth, high-end water/environmental mix, and AI/data-center-related water infrastructure demand.
The bear case is that TTEK is an engineering and consulting company with government funding, project execution, and macro risks. It is not a pure software or semiconductor AI compounder.
The correct conclusion is Buy with a moderate target. The $36 target is below consensus targets around $40-$41, but captures recovery potential from $27.49 while respecting service-business cyclicality.
Synthesis: assign Buy with a $36 target.
III. Trading Team Plan
Trader
Trader View
TTEK is below the $30.12 50-day average and $33.82 200-day average, but above the $25.81 52-week low.
Upside trigger: Q3 net revenue above $1.13 billion, EPS above $0.42, continued Digital Water and Environmental growth, additional data-center cooling awards, or further FY2026 guidance increases.
Downside trigger: Q3 net revenue below $1.08 billion, EPS below $0.40, backlog deterioration, weaker government funding, project delays, or margin compression.
Trading plan: Buy with a $36 6-12 month base-case target and reassess if the stock approaches consensus targets without another guidance raise.
IV. Risk Management Team Decision
Aggressive Analyst
Aggressive Risk View
Aggressive investors can buy TTEK for AI infrastructure-adjacent water, environmental, digital modeling, and data center cooling exposure.
The risk is that the market may not assign a technology multiple to an engineering services company.
Aggressive conclusion: Buy.
Conservative Analyst
Conservative Risk View
Conservative investors should recognize that TTEK has real cash flow and backlog, but also government and project execution risk.
The stock is depressed, but it may need several quarters of execution to recover.
Conservative conclusion: Hold to small Buy.
Neutral Analyst
Neutral Risk View
The neutral view is constructive.
TTEK is not a pure AI stock, but its Digital Water and Environmental segment and data-center cooling exposure create a credible AI infrastructure link.
Neutral conclusion: Buy with a moderate target.
V. Portfolio Manager Decision
Portfolio Manager
Portfolio Manager Decision
Rating: Buy Price Target: 36
Horizon: 6-12 months Current Price Reference: $27.49 on 2026-05-29
Tetra Tech is rated Buy. TTEK is included in the web-researched AI queue because its digital water and environmental solutions use data analytics, AI, cloud, automation, modeling, and decision-support tools, and because AI/data-center buildout increases demand for water infrastructure, cooling, environmental permitting, and sustainable infrastructure services.
The latest major financial update is Q2 FY2026 results. Q2 revenue was $1.13 billion, up 3% year over year. Q2 net revenue was $1.01 billion, up 7% year over year. Operating income was $117 million, up 18%, adjusted EBITDA was $139 million, up 14%, and EPS was $0.38, up 15%.
Cash flow and backlog were strong. Q2 cash flow from operations was $127 million, up 56% year over year. Backlog was $5.64 billion, up 14% year over year. High-end water and environmental services accounted for 90% of net revenue.
The Digital Water and Environmental segment represented 35% of net revenue and delivered 29% organic net revenue growth and 37% operating income growth. Tetra Tech said water infrastructure growth was driven by AI/data centers, advanced manufacturing, and port infrastructure, including a $439 million West Coast port modernization program and data center cooling projects.
Management raised FY2026 guidance to net revenue of $4.34-$4.42 billion and EPS of $1.55-$1.60. Q3 FY2026 guidance calls for net revenue of $1.08-$1.13 billion and EPS of $0.40-$0.42.
yfinance showed a latest price of $27.49, market cap of approximately $7.13 billion, enterprise value of approximately $8.02 billion, 52-week range of $25.81-$43.14, total revenue of approximately $4.40 billion, revenue growth of -4.9%, gross margin of 21.8%, operating margin of 12.5%, profit margin of 10.0%, operating cash flow of approximately $688.1 million, free cash flow of approximately $546.0 million, total cash of approximately $223.6 million, total debt of approximately $1.11 billion, trailing P/E of 16.46x, forward P/E of 16.02x, price/sales of 1.62x, mean analyst target of $40.83, and median analyst target of $40.50.
The main risks are government contract exposure, funding and appropriation cycles, regulatory changes, competition, project execution risk, climate/disaster response volatility, international operations, acquisitions, cybersecurity, macroeconomic weakness, and the possibility that investors do not assign an AI multiple to an engineering services company.
The $36 target is intentionally below consensus targets around $40-$41. It reflects improved Q2 execution, raised guidance, strong backlog, cash generation, and AI/data-center water infrastructure exposure, while still accounting for service-business risks and the stock's weak technical trend.