Tetra Tech (TTEK) Board Okays $400M Share Buyback Program

Tetra Tech (NASDAQ:TTEK), Inc. TTEK announced that its board of directors approved an additional share buyback program worth $400 million. The authorization reflects the company’s shareholder-friendly policies and strong cash position.

In the past two trading days, Tetra Tech’s shares have gained 3.2%, eventually closing the trading session at $157.96 on Friday.

Inside the Headlines

As noted, the $400-million buyback program is in addition to the company’s previous $200-million authorization approved in January 2020. Tetra Tech bought back $45 million worth of shares through open-market transactions in the first three quarters of fiscal 2021 (ended Jun 27, 2021). Specifically, the company bought back 368,177 shares at the rate of $122.22.

Exiting the third quarter of fiscal 2021 (ended Jun 27, 2021), the company was left to repurchase $163 million worth of shares. With the new $400-million program, the company is now left to repurchase $563 million worth of shares under its approved buyback programs.

It is worth noting here that Tetra Tech’s shares outstanding were 54.7 million at the end of the third quarter of fiscal 2021. Also, its cash and cash equivalents were $234.3 million exiting the said quarter, reflecting a sequential increase of 4%.

We believe that improvements in its cash position and financial performances in the quarters ahead will enable the company to reward its shareholders handsomely.

Capital Deployment

Tetra Tech effectively uses capital for boosting organic growth, making acquisitions and rewarding shareholders through dividend payments and share buybacks.

In the first three quarters of fiscal 2021, the company used $17.2 million on business acquisitions (net of acquired cash). During the same period, it added Coanda Research & Development, The Kaizen Company, IBRA-RMAC Automation Systems, Segue Technologies, Inc., and BlueWater Federal Solutions, Inc. In July 2021, Tetra Tech acquired Hoare Lea.

Dividend payments totaled $29.2 million, while share buybacks were worth $45 million (as mentioned above) in the first three quarters of fiscal 2021.

Zacks Rank, Price Performance and Earnings Estimates

With a market capitalization of $8.5 billion, Tetra Tech presently carries a Zacks Rank #3 (Hold). It gains from buyouts, shareholder-friendly policies, solid backlog and strengthening demand. Rising costs and expenses are concerning for the company.

In the past three months, shares of Tetra Tech have increased 25.5% compared with the industry’s growth of 6.8%.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate of the company’s earnings estimates has been unchanged at $3.70 for fiscal 2021 (ended September 2021, results are awaited) and $3.94 for fiscal 2022 (ending September 2022) in the past 60 days. The consensus estimate for the fourth quarter of fiscal 2021 (ended September 2021, results are awaited) is pegged at 99 cents, reflecting no change in the past 60 days.

Tech IPOs With Massive Profit Potential

In the past few years, many popular platforms and like Uber (NYSE:UBER) and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.

For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…

If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.

With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.