TTEK
Tetra Tech, Inc.
$35.05
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 106.1% above fair value
You pay
$35.98
Bear
$13.58
Fair
$17.46
Bull
$21.34
Bear
$13.58
-62.3%
$0.97 × 14x
Fair
$17.46
-51.5%
$0.97 × 18x
Bull
$21.34
-40.7%
$0.97 × 22x
Adjust Assumptions
18.0x
0.97$
Key Value Driver
Through-cycle normalized EPS ($0.97)
Implied Market Multiple
37.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$39.00
Divergence from AlphaVal
55%
Summary
Using 7-year normalized EPS of $0.97 at a 18x cycle multiple, the base-case value is $17.46 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Wall Street's average price target is $39.00 (from 26 analysts). Our estimate is 55% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing