Tetra Tech's Joint Venture Wins $400M Contract From NNSA

Premium consulting and engineering services provider, Tetra Tech, Inc. (NASDAQ:TTEK) , recently clinched a new contract from the U.S. Department of Energy.

Per this contract, Tetra Tech’s joint venture with Sealaska Technical Services will offer design-build services to the Department of Energy’s National Nuclear Security Administration (“NNSA”). The $400-million contract, which will run for seven years, will be shared with this joint-venture partner.

It is a Design, Integration, Construction, Communication, and Engineering (“DICCE”) contract, which will be administered by the NNSA Office of Nuclear Smuggling Detection and Deterrence (“NSDD”). The NSDD helps the U.S. and its partner countries by keeping an eye on illicit trafficking of nuclear and other radioactive materials within and beyond the borders, and stops them in the tracks.

Tetra Tech and its partner are in charge of providing design-build services to aid the installation and deployment of fixed and mobile radiation detection systems. Also, the companies will offer necessary support for associated infrastructure at various vulnerable points, including border checkpoints, airports and seaports, to name a few.

Of late, Tetra Tech has been on a roll, winning multiple contracts from U.S. government authorities, such as the United States Agency for International Development and Department of Defense. During third-quarter 2016, the company’s backlog level for ongoing operations reached a record high of $2.3 billion. This is a remarkable jump of 21% year over year, attributable to contracts won from multi-international development agencies.

Going forward, we believe that Tetra Tech has a solid base for future growth. It’s growth trajectory is driven by solid backlog levels as well as a robust pipeline with major government organizations, like the U.S. Department of State, U.S. Army Corp. of Engineers and U.S. Air Force, awarding billion-dollar deals to the company.These wins will boost Tetra Tech’s top line in the coming quarters, signaling bright prospects ahead for the Zacks Rank #2 (Buy) company.

Stocks to Consider

Some better-ranked stocks in the industry include Energy Recovery, Inc. (NASDAQ:ERII) , Landauer Inc. (NYSE:LDR) and CECO Environmental Corp. (NASDAQ:CECE) . While Energy Recovery sports a Zacks Rank #1 (Strong Buy), CECO Environmental and Landauer carry the same Zacks rank as Tetra Tech. You can see the complete list of today’s Zacks #1 Rank stocks here.

Manufacturer of energy recovery devices – Energy Recovery – has a decent earnings surprise history, beating estimates thrice in the trailing four quarters, with an average positive surprise of 36.2%.

Provider of analytical services, Landauer, has also managed to beat estimates thrice in the last four quarters, resulting in an average positive surprise of 7.0%.

CECO Environmental manufactures and sells fiber bed mist eliminators to multiple industries, including chemical, printing, plating and power generation. The company has an average positive surprise of 16.0%, registering beats three out of four times over the trailing four quarters.

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