Updated April 2025
Tetra Tech might not be the first name that comes to mind for dividend investors, but take a closer look and you’ll see a company that’s carved out a unique space for itself. It specializes in water, environmental, and energy services, using science and technology to address some of the world’s toughest infrastructure and sustainability challenges. Based out of Pasadena, California, it’s been around since 1966, and over the years, it’s grown into a global force with over 20,000 employees.
While the market tends to favor flashier names, Tetra Tech has kept its head down and stayed focused on execution. Its work spans everything from climate change mitigation to resource management—areas that aren’t just trending, they’re becoming essential. For investors looking for steady dividend growers with a long runway, it’s worth taking a serious look.
🧾 Key Dividend Metrics
💵 Forward Dividend Yield: 0.79%
📈 5-Year Average Yield: 0.59%
🔁 Dividend Growth Streak: 10+ years
📆 Last Dividend Date: February 26, 2025
⚖️ Payout Ratio: 23.79%
💸 Forward Annual Dividend Rate: $0.23
📉 52-Week Stock Performance: -22.54%
Recent Events
The past year has been a bit bumpy for Tetra Tech shareholders. Shares have fallen more than 22% from their 52-week high, with the stock recently closing at $29.55. That’s a far cry from its high of $51.20 and well below both its 50-day and 200-day moving averages. While that kind of drop raises eyebrows, the underlying business has been telling a more resilient story.
Revenue has actually been growing—up almost 18% year over year—which signals demand for the company’s expertise is still intact. But earnings? That’s where the concern is. The most recent quarter showed a 99% drop in earnings growth, a number that’s hard to ignore even if it was driven by some one-time items.
Despite the hit to earnings, Tetra Tech continues to generate strong free cash flow and maintains solid profitability. Net income for the trailing twelve months was $259 million, and operating margins remain healthy. It’s a reminder that market sentiment doesn’t always match up with a company’s fundamentals.
Dividend Overview
Tetra Tech’s dividend isn’t going to knock anyone’s socks off at first glance. The forward yield is just under 0.8%, which is modest compared to traditional dividend heavyweights. But that number is slightly higher than the company’s five-year average of 0.59%, showing a bit of yield expansion in today’s environment.
The annual dividend payout stands at $0.23 per share. It’s not huge, but it’s consistent. And with a payout ratio under 24%, there’s plenty of room for the company to keep that dividend moving upward. Tetra Tech isn’t stretching itself thin to reward shareholders—it’s paying out from a position of strength.
The most recent dividend was paid on February 26, following a February 12 ex-dividend date. There are no red flags here. The company’s approach to shareholder returns is measured and reliable.
Dividend Growth and Safety
Where Tetra Tech really starts to shine for income investors is in its track record. The company has increased its dividend consistently for over a decade. While the raises tend to be modest—usually in the single-digit percentage range—they add up over time. It’s the kind of compounder that quietly builds wealth in the background.
Safety is also a strong suit here. The company is generating more than enough free cash flow—nearly $379 million over the last 12 months—to cover its dividend obligations. Debt is manageable, with a total debt load of about $1.08 billion and a debt-to-equity ratio sitting at 64%. Cash reserves are healthy, and the current ratio of 1.29 shows there’s no immediate liquidity pressure.
From a capital efficiency standpoint, Tetra Tech scores well. Return on equity is over 16%, and return on assets is just above 8%. These are good numbers that point to a management team that knows how to deploy capital effectively.
The stock’s low beta, sitting at 0.93, also suggests that it moves less dramatically than the broader market. For dividend investors, that kind of stability is more than welcome—especially when paired with steady, long-term growth.
In short, Tetra Tech offers a quiet but solid approach to dividend investing. It won’t be the highest-yielding stock in your portfolio, but it could be one of the more dependable.
Chart Analysis
Overall Trend and Structure
The chart paints a clear story of a company that experienced a strong upward climb from early spring through late fall, peaking around mid-November. After that, the trend reversed with conviction. There’s a steep and prolonged decline from December into early March, followed by some stabilization over the past few weeks.
Both the 50-day and 200-day moving averages tell a consistent tale. The red 50-day moving average began sloping downward in early December and continues that path sharply, while the blue 200-day moving average has only recently started to curl lower. This kind of crossover—where the shorter-term average falls beneath the longer one—is often viewed as a sign of deeper weakness taking hold.
The stock is now trading well below both moving averages, a signal that momentum has clearly shifted to the downside over the past quarter.
Volume Behavior
Volume spikes have occurred at key turning points. There was a notable surge in volume during the sharp drop in early December and again around mid-February. These volume bursts tend to coincide with periods of elevated selling pressure, suggesting that the move downward wasn’t just a trickle of profit-taking but rather heavier distribution.
More recently, volume has tapered off. That’s not necessarily bullish, but it does indicate that the aggressive selling may have cooled for now. It’s common to see this kind of quieting before a base begins to form.
RSI Momentum
The Relative Strength Index (RSI) reinforces what’s visible in the price action. The RSI dipped into oversold territory—below 30—multiple times during February and early March. That prolonged weakness hints at how extended the selling had become. Now, RSI is beginning to recover and is currently hovering near the midpoint.
While it hasn’t yet signaled overbought levels, the RSI’s steady climb from its March lows suggests that buying interest is starting to return, albeit gradually.
Recent Candle Behavior
Looking closely at the latest five candles on the chart, there’s a pattern of smaller bodies with wicks on both ends. That kind of indecision often reflects a tug-of-war between buyers and sellers, with neither side firmly in control. However, the lack of new lows is a positive sign after such a deep drawdown.
There’s also a bit of range compression—price action is tightening—which often precedes a breakout or breakdown. The longer this range holds, the more significant the move tends to be once the direction is resolved.
Final Takeaway from the Chart
This stock has clearly completed a significant markdown phase over the past few months. What we’re seeing now is a potential shift into a new phase—perhaps early signs of accumulation. It’s too soon to call a reversal, but the bleeding has stopped for now. Whether that base continues to build or cracks again will come down to whether renewed interest is met with volume follow-through.
For now, it’s a wait-and-watch situation, but the chart no longer looks like it’s in free fall. Instead, it’s starting to stabilize and show early signs of repair.
Balance Sheet Analysis
Tetra Tech’s balance sheet over the past few years tells the story of a company that’s been scaling up aggressively—though not without making a few dents along the way. Total assets have grown steadily, hitting over $4.1 billion in 2024, up from just $2.6 billion three years ago. That’s a sizable expansion, and much of it has been fueled by increased liabilities. Total liabilities jumped to around $2.36 billion, nearly doubling since 2021, though they actually dipped slightly from the prior year—perhaps a rare moment of restraint.
Equity has kept pace nicely, climbing to $1.83 billion this year. That’s a solid rise from $1.18 billion two years ago and shows that the business is still building value for shareholders despite the cost of growth. However, the negative net tangible assets of -$376 million suggest a balance sheet leaning heavily on goodwill and intangibles—probably the result of acquisitions. Let’s just say if you’re looking for a lot of hard assets, you might need a flashlight.
Working capital more than doubled over the past year, which signals improved short-term health. Meanwhile, total debt has come down slightly from last year’s peak, now sitting just above $1 billion. Net debt also improved, dropping to $579 million from over $700 million. The share count has remained stable, with minimal dilution, which is always refreshing in a world where some companies hand out stock options like Halloween candy. All in all, this balance sheet reflects a business that’s growing fast, taking on risk, but not losing the plot.
Cash Flow Statement
Tetra Tech continues to show consistency where it matters—cash coming in from operations. Over the trailing twelve months, operating cash flow held steady at $362.5 million, nearly identical to the prior two years. That’s not just steady hands; it’s a sign that the company’s core business is reliably converting revenue into real money. Free cash flow followed the same pattern, landing at $344 million. These aren’t flashy numbers, but they’re solid and dependable, especially in a business that relies heavily on contracts and long-term projects.
Investing cash flow stayed deep in the red at -$111 million, but that’s far less dramatic than the -$771 million from 2022, which was likely driven by a major acquisition or investment surge. Financing cash flow was negative again, at -$190 million, reflecting ongoing debt repayments and a recent $25 million stock buyback. The company issued $182 million in new debt but paid back more than it borrowed, suggesting a move toward tightening its capital structure. Even with all that movement, the end cash position climbed to $259 million—up more than 50% from just two years ago. Not a bad place to be when the economic waters start to churn.
Analyst Ratings
📉 In recent months, Tetra Tech has experienced a few analyst rating changes that have stirred up investor attention. Notably, on February 6, 2025, Maxim Group downgraded the stock from a buy to a hold. This shift came on the back of concerns that federal government contracts—one of Tetra Tech’s major revenue channels—could face cuts, especially with shifting political dynamics that might tighten public sector spending. The downgrade wasn’t a reaction to the company’s fundamentals, which remain relatively stable, but more a preemptive move reflecting caution about external risk.
🔧 Earlier, on January 31, 2025, KeyCorp also adjusted its stance slightly, lowering the price target from $49 to $45 while keeping an overweight rating. It wasn’t a vote of no confidence—more like a slight tap on the brakes. The revised target reflected a tempered growth outlook as analysts reassessed margin pressures and the impact of contract timing delays.
📊 Still, the broader analyst community hasn’t thrown in the towel. The consensus 12-month price target now sits around $45.60, leaving some room for potential upside from the current trading levels. Overall sentiment remains in the moderately bullish camp, with most analysts rating the stock a “Moderate Buy.” That suggests a general belief in the company’s long-term strategy, even if short-term headwinds are clouding the view a bit.
Earnings Report Summary
Strong Start to the Year
Tetra Tech came out of the gate strong in its first quarter of fiscal 2025, showing some real momentum across both revenue and profit. Net revenue came in at $1.2 billion, up 18% compared to the same time last year. That growth wasn’t just on paper—it came from both of its core segments doing some heavy lifting. The Government Services Group had an especially impressive quarter, with revenue jumping 36% to $601 million. A good chunk of that came from project work in places like Ukraine, which has been a hot zone for reconstruction and support work. The Commercial International Group wasn’t far behind, pulling in $596 million with a steady 4% growth rate and a solid 13% profit margin.
Operating income was also on the rise, growing 24% year-over-year to $138 million. That helped push earnings per share to $0.35, which managed to beat both the company’s own projections and what the market was expecting. And if you’re someone who watches the backlog number, you’ll like this—Tetra Tech ended the quarter with a record $5.44 billion in backlog. That’s a good sign the work pipeline isn’t drying up anytime soon.
Growth Across the Board, But a Few Bumps
The growth wasn’t isolated to just one area. Revenue from U.S. federal clients was up 32%, helped along by solid contributions from agencies like USAID. State and local governments stepped up spending too, driving a 47% increase in revenue there, particularly in water treatment and disaster recovery services. International business also chipped in, rising 4% on the back of strong consulting demand in the UK.
It wasn’t all smooth sailing, though. There were a few headwinds—mainly temporary holds on some federal contracts while the new administration reviewed policies. That added a little uncertainty to the near-term outlook. And let’s not forget the impact of a litigation settlement and the fallout from some recent natural disasters, which always add a layer of complexity. Even so, the company’s broad mix of services and geographies seems to be keeping it on steady ground as it moves through the year.
Management Team
At the helm of Tetra Tech is Dan L. Batrack, who serves as Chairman, Chief Executive Officer, and President. Batrack has played a central role in guiding the company through multiple phases of growth and transformation. Supporting him is Steven M. Burdick, Executive Vice President and Chief Financial Officer, who leads the company’s financial strategy and operations. Leslie L. Shoemaker, PhD, holds the role of Executive Vice President and Chief Innovation and Sustainability Officer, driving efforts in sustainable development and innovation. Also on the leadership team is Preston Hopson, Executive Vice President and Chief Legal and Human Capital Officer, overseeing the legal landscape and internal workforce development. Together, this team has steered Tetra Tech with a steady hand through industry changes and strategic pivots.
Valuation and Stock Performance
As of early April 2025, Tetra Tech’s stock is trading around $29.55. It’s been a volatile year for the stock, with a 52-week high of $51.20 and a low of $28.17. The company’s beta of 0.93 suggests its stock tends to move slightly less than the broader market, offering a somewhat smoother ride for shareholders.
On the valuation front, the stock trades at a price-to-earnings ratio of about 30.75, roughly in line with many of its industry peers. The forward P/E is lower at 20.89, indicating expectations for earnings growth down the line. The price-to-sales ratio sits at 1.74, and price-to-book is 4.63. These metrics suggest the stock isn’t in bargain territory, but it also isn’t excessively priced. Investors appear to be paying a fair premium for the company’s predictable earnings and strong positioning in environmental consulting and government contracts.
Risks and Considerations
Tetra Tech, like any company, carries its share of risks. One of the biggest is its reliance on government contracts, which make up a meaningful slice of its revenue. Any significant shift in federal or state budget priorities could put pressure on the company’s project pipeline. A change in administration or policy direction has the potential to impact funding for infrastructure or environmental programs, which in turn could ripple through to Tetra Tech’s financials.
There are also the rising pressures around environmental, social, and governance (ESG) standards. While Tetra Tech operates in sectors directly tied to sustainability, increasing expectations from stakeholders can add costs and complexity. Failing to keep pace with evolving ESG benchmarks could hurt its standing with investors or limit access to certain funding.
On the legal front, the company has had to navigate past challenges, including settlements linked to environmental cleanup work. These legal matters, even when resolved, can leave lasting dents in both reputation and balance sheets. For a company that trades on its credibility and technical expertise, protecting that trust is critical.
Final Thoughts
Tetra Tech continues to stand out in its space for its disciplined execution, strong leadership, and focus on long-term growth areas like water, infrastructure, and environmental consulting. While the stock has faced pressure recently, its fundamentals remain solid and the long-term strategy is clear. The company’s approach to shareholder value through consistent cash flow, modest but steady dividends, and strategic project wins makes it a name worth watching.
Of course, the path forward comes with uncertainties—especially around policy shifts and the burden of compliance. But with a management team that has navigated rough terrain before and a financial profile that balances growth with prudence, Tetra Tech seems positioned to keep doing what it does best: solving complex problems with a steady hand.