Tetra Tech, Inc. (TTEK): BCG Matrix [Dec-2025 Updated]

You're looking for the clearest map of where Tetra Tech, Inc. (TTEK) is putting its capital and what's generating real returns as of late 2025, so here's the quick math on their business units. Honestly, the picture shows clear segmentation: the Government Services Group (GSG) is firing on all cylinders, fueling a 37% surge in operating income, while the Commercial/International Group (CIG) acts as the dependable Cash Cow, generating $462 million in operating cash flow over the last twelve months. We've also identified legacy USAID/DOS work as Dogs needing a hard look, and the big digital bets are Question Marks that require careful capital deployment. Keep reading to see the full breakdown of these four quadrants and what it means for your investment thesis.

Background of Tetra Tech, Inc. (TTEK)

Tetra Tech, Inc. (NASDAQ: TTEK) is a firm you'd look at for high-end consulting and engineering services, focusing on areas like water management, environment, and sustainable infrastructure. They tout a 50-year legacy of 'Leading with Science' and operate across all seven continents, so they've definitely established a global footprint.

Looking at the numbers for the fiscal year ended September 28, 2025, Tetra Tech, Inc. posted record annual revenue of $5.443B. The company also reported a record annual net revenue of $4.62 billion for the same period. Honestly, their financial performance for 2025 was described by the Chairman and CEO as achieving 'record net revenue, record operating income, and significant operating margin expansion'.

When you break down that total revenue for fiscal year 2025, the business is split into two main groups. The Commercial/International Services Group was the largest contributor, generating $2.84 B in revenue, which accounted for 51.55% of the total. The Government Services Group (GSG) followed, bringing in $2.67 B, or 48.45% of the total revenue.

Drilling down into the fourth quarter of 2025, which ended on September 28, 2025, the results were strong, with revenue hitting $1.16 billion. The reported earnings per share (EPS) for that quarter was $0.44. The GSG segment, specifically, showed strong growth in that quarter, with revenue increasing 17% year-over-year to $396 million.

As of early December 2025, the market capitalization for Tetra Tech, Inc. was hovering around $9.06 Billion. You'll see a trailing twelve months (ttm) Price-to-Earnings ratio in the range of 37.35 to 43.42, depending on the source you check. The company supports its stock with a dividend; they recently approved the 46th consecutive quarterly dividend at $0.065 per share, which is a 12% increase from the prior year.

For the near term, Tetra Tech, Inc. provided guidance for fiscal year 2026, expecting net revenue between $4.05 billion and $4.25 billion. On a longer-term strategic view, the company has set a target for organic growth of 6-10% by 2030, coupled with a plan to expand margins by 50 basis points annually.

Tetra Tech, Inc. (TTEK) - BCG Matrix: Stars

You're looking at the engine room of Tetra Tech, Inc. (TTEK)'s current growth story-the Stars quadrant. These are the business units operating in high-growth markets where the company has secured a leading market share. They consume cash to fuel expansion but are rapidly becoming the future Cash Cows. The performance data from fiscal year 2025 clearly illustrates this high-velocity segment.

The Government Services Group (GSG), when excluding the lower-margin USAID/Department of State (DOS) work, demonstrated exceptional momentum. For the third quarter of fiscal year 2025, the GSG segment reported a net revenue growth of 29% year-over-year, reaching $429 million in that quarter alone. This rapid expansion in a core, growing market is the hallmark of a Star.

The overall profitability of Tetra Tech, Inc. (TTEK) is being significantly lifted by these high-margin activities. For Q3 FY2025, the company's operating income surged by 37% year-over-year, hitting $159 million. This outsized income growth, compared to the overall net revenue growth of 11% for the same quarter (excluding USAID/DOS), shows the high-margin nature of the work driving the Star status. The earnings per share (EPS) for that quarter jumped even higher, increasing by 46% year-over-year to $0.41.

Here's a quick look at the Q3 FY2025 financial snapshot for the key growth drivers:

The specific services defining these Stars are centered on essential, future-facing infrastructure needs. The backlog for the high-voltage engineering practice, for instance, doubled in the fourth quarter, directly fueled by the demand for data center development and other water-reliant infrastructure. This practice is critical because data centers require significant water management and power solutions, which plays directly into Tetra Tech, Inc. (TTEK)'s core competencies in resilient water management and digital automation.

The key indicators pointing to the Star classification are clear:

• GSG net revenue growth of 29% in Q3 FY2025.
• High-voltage engineering backlog doubled in Q4 2025.
• Operating income surge of 37% in Q3 FY2025.
• Focus on high-end consulting in resilient water management.
• Strong demand from data center and industrial manufacturing sectors.

Sustaining this success means continuing to invest heavily in these areas, as the high growth rate consumes the cash generated. If the market growth for digital water automation and resilient infrastructure remains elevated, these units will transition into Cash Cows when the market matures.

Tetra Tech, Inc. (TTEK) - BCG Matrix: Cash Cows

Cash Cows are the bedrock of Tetra Tech, Inc. (TTEK)'s financial stability, representing business units with a high market share in mature service areas that generate more cash than they consume. For Tetra Tech, Inc. (TTEK), this category is anchored by its established consulting and engineering services, particularly in essential environmental and water infrastructure.

The Commercial/International Group (CIG) clearly fits this profile as the largest segment, generating $2.84 billion in Fiscal Year (FY) 2025 revenue. This segment represents a significant portion of the total business, which reached $5.44 B in annual revenue for FY2025. This scale in mature, essential services provides the high market share characteristic of a Cash Cow.

The financial output from these stable operations is substantial. Tetra Tech, Inc. (TTEK) reported strong cash generation, with cash flows from operations reaching $462 million during the third quarter of 2025, reflecting a 23% improvement. Furthermore, the record Operating Cash Flow for the full fiscal year 2025 was $458 million, up 28% year-over-year. This robust cash flow is what allows Tetra Tech, Inc. (TTEK) to fund other strategic areas and reward shareholders.

The commitment to shareholders is a hallmark of a well-managed Cash Cow. Tetra Tech, Inc. (TTEK) demonstrated this consistency with the approval of its 46th consecutive quarterly dividend on November 10, 2025. The declared dividend was $0.065 per share, payable on December 12, 2025. This latest increase marked a 12% rise year-over-year for the dividend payment.

You can see the segment revenue breakdown that underpins this Cash Cow status here:

The low-growth, high-share nature of these services means investments are focused on maintenance and efficiency, not aggressive market expansion. The strategy centers on milking the gains passively while ensuring the infrastructure supporting these core services remains highly efficient. Key areas where support investments improve cash flow include:

• Maintaining best-in-class Days Sales Outstanding (DSO), which was 55.9 days in Q1 2025.
• Focusing on high-margin, front-end consulting and design work.
• Ensuring high contract conversion from the backlog, with an estimate that about 70% of the year-end 2025 backlog will convert to revenue in FY2026.

This segment generates the necessary capital to support the entire enterprise, which is exactly what you want from a Cash Cow. The consistent dividend history, now at 11 consecutive years of increases, is a direct result of this reliable cash generation.

Tetra Tech, Inc. (TTEK) - BCG Matrix: Dogs

You're looking at the parts of Tetra Tech, Inc. (TTEK) portfolio that aren't pulling their weight in terms of market growth or share, even if they aren't outright bleeding cash. These are the units where expensive turn-around plans defintely won't work; the strategy here is usually to minimize exposure or divest.

The most prominent example fitting the Dog profile stems from the significant contraction in work tied to the U.S. Agency for International Development (USAID) and the Department of State (DOS). While Tetra Tech, Inc. has shown remarkable resilience by securing new business, the sheer scale of the de-obligation from this major client base forces the associated revenue stream into the low-growth, low-share category relative to the company's overall trajectory.

Here's a quick look at the financial impact related to this shift, which helps categorize the affected business units as Dogs:

The explicit way the company now handles these contracts-often excluding them from forward-looking metrics like Book-to-Bill-signals a strategic move away from prioritizing them, which is classic Dog behavior. These are units where market growth is either stagnant or declining due to external policy shifts, and the company's relative share within that specific contract pool is now shrinking or being managed down.

• Contracts with USAID and DOS de-obligated by approximately $1.1 billion.
• Impairment charge of $92.4 million taken in Q2 FY2025.
• Work for other federal agencies grew 16% in one quarter, highlighting the relative slowdown in the de-obligated portion.
• Remaining USAID work is now focused on specific areas like Ukraine, valued around $220 million.

Also, consider the Commercial/International Services Group (CIG). While it remains the largest segment by revenue, its growth rate suggests it is not a Star. For the fiscal year ending September 30, 2025, CIG revenue was estimated at $2.84 Billion, representing 51.55% of total revenue, but its year-over-year growth was only 2.08%. This low growth, coupled with the description of legacy engineering services that offer little upside, places these commoditized offerings squarely in the Dog quadrant, even if they break even.

These legacy services, often requiring minimal new capital but yielding low returns, are prime candidates for divestiture or strategic minimization to free up management focus.

• Commercial/International Services Group revenue growth was 2.08% in FY2025.
• CIG revenue reached $2.84 Billion in FY2025.
• Overall Gross Margin for the latest quarter was 19.4%, which can mask lower-margin legacy work.
• Trailing 12-Month Free Cash Flow Margin was 9.5%.

Finance: review the profitability breakdown of the non-USAID/DOS federal contracts by end of next week.

Tetra Tech, Inc. (TTEK) - BCG Matrix: Question Marks

You're looking at the areas of Tetra Tech, Inc. (TTEK) that are in high-growth markets but haven't yet secured a dominant market share. These units consume cash now, hoping to become Stars later. Here's the quick math on what's consuming capital in the high-growth, low-share quadrant as of late 2025.

Digital Systems and Automation Initiatives

The digital push is a clear investment area, with a stated goal to double revenue in this segment from an estimated $250 million in 2025 to $500 million by 2030. That's a significant growth trajectory, especially when you consider the segment was at $175 million in 2023. Still, recent headwinds show the path isn't perfectly smooth. Recurring software revenue held steady at approximately $25 million for about 18 months due to a U.S. federal moratorium on new software subscriptions. However, the segment remains a key driver, evidenced by a $10 million single-award contract for water digital automation systems for Los Angeles County secured in the third quarter of fiscal 2025. You defintely want to watch the pace of adoption now that the moratorium seems to be lifting.

Broader Renewable Energy Portfolio Headwinds

The broader renewable energy portfolio, while high-potential, showed clear signs of market softness impacting near-term guidance. Specifically, U.S. commercial renewables, particularly offshore wind work, saw a year-over-year decline of approximately 30% in the fourth quarter of 2025. This softness was explicitly cited as a headwind when management issued guidance. This is the classic Question Mark dilemma: high market growth potential, but current execution or market conditions are lagging, causing low returns relative to investment.

New Geographical Expansion

Expanding into high-growth regions like Europe, Asia-Pacific, and Latin America is cash-intensive, fitting the Question Mark profile. While the United States remains the core, generating approximately 73.77% of total revenue, or $3.45 B in fiscal 2025, international growth is showing up in contract wins. For instance, the USACE Europe District secured a $248 million multiple-award contract in Q3 2025. The current geographical revenue breakdown for fiscal 2025 shows the scale of the domestic focus versus international efforts:

The full-year 2025 Net Revenue guidance was set between $4.454 billion and $4.554 billion, showing the overall growth rate is still strong, but the international share needs to increase quickly to avoid becoming a Dog.

Decarbonization and Electrification Services

Services related to decarbonization and electrification represent a high-potential market that requires significant upfront investment to build capability and secure large contracts. This unit consumes cash to establish a foothold in what is expected to be a massive future market. A concrete example of a recent win supporting this area was a $38 million multiple-award contract in the fourth quarter of 2025 for transmission and distribution services with an Irish grid operator. This type of infrastructure work is capital-intensive but positions Tetra Tech, Inc. for future, larger-scale projects as the energy transition accelerates. You can see the focus on this area in the backlog, which stood at $4.15 billion in Q3 2025, up year-over-year and sequentially.

• The company is working to decarbonize its own operations, aiming for a 50% reduction in baseline emissions by 2030.
• The baseline year for emissions is October 2021 - September 2022, with total emissions of 3,396.2 tCO2e.
• Current emissions reporting for October 2023 - September 2024 showed a total reduction of 652.8 tCO2e from the baseline.

Finance: draft 13-week cash view by Friday.