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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
In contrast to all that, many investors prefer to focus on companies like Tetra Tech (NASDAQ:TTEK), which has not only revenues, but also profits. While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
We've discovered 1 warning sign about Tetra Tech. View them for free.
Tetra Tech's Improving Profits
Even modest earnings per share growth (EPS) can create meaningful value, when it is sustained reliably from year to year. So it's no surprise that some investors are more inclined to invest in profitable businesses. It's good to see that Tetra Tech's EPS has grown from US$0.87 to US$0.97 over twelve months. This amounts to a 11% gain; a figure that shareholders will be pleased to see.
It's often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company's growth. Tetra Tech maintained stable EBIT margins over the last year, all while growing revenue 12% to US$4.5b. That's encouraging news for the company!
The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers.
See our latest analysis for Tetra Tech
In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Tetra Tech's forecast profits?
Are Tetra Tech Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$8.3b company like Tetra Tech. But thanks to their investment in the company, it's pleasing to see that there are still incentives to align their actions with the shareholders. As a matter of fact, their holding is valued at US$40m. That's a lot of money, and no small incentive to work hard. Even though that's only about 0.5% of the company, it's enough money to indicate alignment between the leaders of the business and ordinary shareholders.
Is Tetra Tech Worth Keeping An Eye On?
As previously touched on, Tetra Tech is a growing business, which is encouraging. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. These two factors are a huge highlight for the company which should be a strong contender your watchlists. We should say that we've discovered 1 warning sign for Tetra Tech that you should be aware of before investing here.