Tetra Tech, Inc. (TTEK) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Tetra Tech, Inc. (TTEK)

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Intrinsic Value (DCF)

Current$37.17

→

Intrinsic$42.01

+13%

$27.66$42.01$69.26

Market implies 16% growth for 5 years

Growth 18%

Discount 10%

Terminal 3%

TTEK appears fairly valued — current price aligns with our DCF estimate.

At $37, the market prices in continued high-teens cash flow growth (16%) — likely reflecting buybacks, margin stability, and ecosystem strength.

Range: Bear $28 → Bull $69. Current price implies expectations below the base case, but well above the bear case.

Discount ↓Growth →	14%	16%	18%	20%
8%	$52	$56	$61	$66
10%	$35	$39	$42	$46
12%	$26	$29	$31	$34
14%	$21	$23	$25	$27

Bull Case

Bull case ($69) offers 86% upside at 22% growth, 9% discount
12% margin of safety vs. base case estimate
Market-implied growth (16%) ≤ historical CAGR (18%)

Bear Case

Bear case ($28) implies 26% downside at 15% growth, 12% discount

Intrinsic Value vs Current Price

5-Year Cash Flow Projection

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5-Year Free Cash Flow Projection

Year 1$519.42M

Year 2$614.49M

Year 3$726.97M

Year 4$860.04M

Year 5$1.02B

Terminal$14.97B

📐 Model Inputs

Growth Rate18.3%5Y CAGR (cascade: 5Y→3Y→TTM)

Discount Rate10.0%WACC estimate

Terminal Growth3.0%Perpetuity rate

Base Free Cash Flow$439.05MTTM actual

Bear g×0.8, r+2%

Base Historical CAGR

Bull g×1.2, r−1.5%

ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is TTEK stock undervalued or overvalued?

🟢 UNDERVALUED

TTEK trades at $37.17 vs. our DCF-derived intrinsic value of $42.01, implying +21% upside. At a 10.0% WACC and 18.3% projected FCF growth, the market appears to be underpricing the present value of TTEK's future cash flows. The bear case ($26.89) still suggests upside, providing margin of safety.

What is TTEK's intrinsic value?

Using a 5-year DCF model: Base FCF of $439M, projected at 18.3% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $820M net debt and dividing by 0.27B shares: Bear $26.89 | Base $42.01 | Bull $64.01. Current price $37.17 implies +21% to base case.

How is TTEK's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 18.3% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($12.04B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 27.4x.

Tetra Tech, Inc. (TTEK) Intrinsic Value