Here's Why Investors Should Avoid Tetra Tech Stock Right Now

Tetra Tech Inc.’s TTEK financial stability is challenged by escalating operating costs and expenses and high debt levels. Also, given the company’s extensive international presence, foreign currency headwind is an added uncertainty.Headquartered in Pasadena, CA, Tetra Tech is a leading provider of consulting, construction management, engineering, program management and technical services. It serves clients by providing cost-effective and innovative solutions for dealing with the fundamental needs for water, environmental and alternative energy services.Image Source: Zacks Investment ResearchTetra Tech currently carries a Zacks Rank #4 (Sell). In the past year, the stock has lost 15% compared with the industry’s 2.7% decline.High Costs:  Tetra Tech is plagued by rising costs and expenses. The company's total cost of sales increased 15.5% in the first quarter of fiscal 2025 (ended Dec. 29, 2024) due to rising input costs. Also, its selling, general and administrative expenses increased 5.7% year over year in the fiscal first quarter due to rising marketing costs. Escalating costs pose a threat to the bottom line.Increasing Debt Level: High debt levels may raise TTEK’s financial obligations and drain its profitability. Tetra Tech’s long-term debt in the last five years (2020-2024) increased 29.7% (CAGR). The company exited first-quarter fiscal 2025 with a long-term debt of $889 million. Its overall current liabilities were $1.3 billion, higher than the cash equivalents of $248.1 million.Risks Related to Government Contracts: The company generates a significant portion of its revenues from U.S. federal, state and local contracts, which are typically multi-year agreements. Any changes in the terms, clauses or funding of these contracts could negatively impact the business. The company's services in the cyclical mining and oil & gas industries are vulnerable to economic downturns, with fluctuating metal prices potentially leading to project cancellations or reductions from its mining clients.Forex Woes: TTEK operates across international locations, which exposes it to certain political, environmental and geopolitical issues, as well as currency translation risks. This could affect its performance in the quarters ahead. A stronger U.S. dollar is likely to depress the company's overseas business results in the quarters ahead.Stocks to ConsiderSome better-ranked companies are discussed below.RBC Bearings Incorporated RBC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.RBC delivered a trailing four-quarter average earnings surprise of 4.9%. In the past 60 days, the Zacks Consensus Estimate for RBC’s fiscal 2025 earnings has increased 1.2%.Enersys ENS presently sports a Zacks Rank of 1. The company delivered a trailing four-quarter average earnings surprise of 2.2%.In the past 60 days, the consensus estimate for ENS’ fiscal 2025 earnings has increased 10%.Applied Industrial Technologies AIT presently carries a Zacks Rank #2 (Buy). AIT delivered a trailing four-quarter average earnings surprise of 5.3%.In the past 60 days, the consensus estimate for AIT’s fiscal 2025 earnings has inched up 1.4%.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tetra Tech, Inc. (TTEK): Free Stock Analysis Report RBC Bearings Incorporated (RBC): Free Stock Analysis Report Applied Industrial Technologies, Inc. (AIT): Free Stock Analysis Report Enersys (ENS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks