The Conviction
Willdan Group has tripled from its 52-week low of $30 to roughly $80 in under a year. That kind of move usually means the easy money is gone. In this case, I think the repricing is only half done.
The numbers from FY2025 are hard to argue with: net revenue of $364.8 million, up 23.1% year over year. Adjusted EBITDA of $79.5 million, up 40.2%. GAAP diluted EPS of $3.49, more than doubling from $1.58 the prior year (Willdan Q4 FY2025 earnings release, February 26, 2026). Free cash flow hit $71 million, a 19% margin on net revenue. The company moved to a net positive cash position of $17 million for the first time since 2017 (Kim Early, CFO, Q4 FY2025 earnings call, February 26, 2026). These are not the financials of a company that should trade at 16x forward earnings.
Willdan sits at the intersection of three structural demand drivers that are all accelerating at once: state-mandated utility energy efficiency programs, grid modernization for renewables and distributed resources, and the entirely new consulting workload created by data center electricity demand. The company is not building power plants or stringing transmission lines. It is the engineering and consulting brain that tells utilities how to manage all of it. That positioning, with contracted multi-year revenue and expanding margins, makes this one of the cleaner small-cap growth stories in the infrastructure space.
| Metric | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E |
|---|---|---|---|---|---|
| Net Revenue | $228M | $268M | $296M | $365M | $390-405M |
| Adj. EBITDA | $36M | $47M | $57M | $79.5M | $85-90M |
| EBITDA Margin | 15.8% | 17.5% | 19.1% | 21.8% | ~22% |
| Adj. Diluted EPS | $1.25 | $1.82 | $2.65 | $4.89 | $4.50-4.70 |
| Free Cash Flow | $18M | $28M | $42M | $71M | n/a |
The Business
Willdan is an Anaheim, California-based professional services firm that operates in two segments. The Energy segment, roughly 75% of net revenue, designs and implements energy efficiency programs, demand response solutions, electrification initiatives, and grid planning studies for major utilities including Pacific Gas & Electric, Southern California Edison, and Puget Sound Energy. These programs are typically mandated by state regulators, funded through utility rate bases, and executed under multi-year contracts. The result is a revenue stream with unusual visibility and recession resistance for a company of this size.
The Engineering and Consulting segment, roughly 25% of net revenue, provides municipal engineering, building plan review, financial advisory, and public works consulting to cities and government agencies. It is lower-growth but high-margin and provides a stable foundation. The January 2026 acquisition of Compass Municipal Advisors expanded the financial advisory practice within this segment.
The metric that matters most for Willdan is adjusted EBITDA margin. It tells you whether the company is winning higher-value work and executing with discipline, or just growing revenue by passing through subcontractor costs. For years, the margin hovered in the mid-teens. In FY2025, it crossed 20% for the first time. That is the inflection.
The Case
Three drivers underpin the bull thesis: utility energy efficiency spending that is structurally growing, a data center consulting opportunity that is just beginning to scale, and a margin expansion story that has room to run.
Utility Energy Efficiency Is a Regulated Growth Engine
Willdan's core business depends on a simple fact: state regulators require utilities to spend money on energy efficiency, and those mandates are expanding. California's Big Three utilities (PG&E, SCE, SDG&E) are Willdan's largest customers. The California Public Utilities Commission has consistently increased energy efficiency budgets, and other states (New York, New England, Pacific Northwest) are following the same trajectory. These are not discretionary budgets that get cut in a downturn. They are regulatory requirements funded through rate-base mechanisms.
The contract pipeline reflects this. In February 2026, Willdan won a $112 million energy savings performance contract with the City of San Diego (BusinessWire, February 2026). In March 2026, Puget Sound Energy selected Willdan for telecommunications and multifamily energy programs (BusinessWire, March 2026). These are large, multi-year engagements that provide years of revenue visibility. The $112 million San Diego contract alone represents roughly 30% of a full year's net revenue.
“Electric load growth has returned to the United States after about 15 years of stagnation.”
Mike Bieber, President and CEO — Q4 FY2025 earnings call, February 26, 2026
That quote from CEO Mike Bieber frames the macro precisely. After more than a decade of flat electricity demand in the U.S., load growth is accelerating because of electrification, EV adoption, and data center construction. For utilities, this means more complexity to manage, more infrastructure to plan, and more efficiency programs to offset peak demand. Willdan is the consulting layer that helps utilities respond to all of it.
Data Centers Are Creating an Entirely New Revenue Stream
The most interesting growth vector for Willdan is barely visible in the current financials. Through its APG acquisition (a power engineering firm serving commercial customers including data centers and hyperscalers), Willdan has built a direct line into the data center buildout. The numbers are still small relative to total revenue, with commercial customers representing about 11% of revenue. But the trajectory is steep.
“We expect that work to more than double in 2026, and we are growing that backlog into 2027 and 2028 now because they're long-term contracts.”
Mike Bieber, President and CEO — Q4 FY2025 earnings call, February 26, 2026
Bieber called the commercial sector "the most fertile business environment we serve" on the Q4 call. Willdan completed an independent rate design study for Amazon evaluating large electric loads (Willdan Q4 FY2025 earnings release). When Amazon is asking you to help figure out how to price electricity for its data centers, you are positioned at the right point in the value chain.
The data center opportunity is additive to the core utility business, not a replacement. Utilities need help managing the unprecedented load growth that data centers create. That means more grid planning studies, more demand response program design, more infrastructure consulting. Willdan gets paid on both sides: by the utilities managing the complexity and by the commercial customers (like Amazon) generating it.
By customer type in FY2025, utilities represented about 41% of revenue, state and local governments about 48%, and commercial customers 11% (Q4 FY2025 earnings call). That commercial slice is the one to watch. If APG-related work truly doubles in 2026 as Bieber indicated, commercial could approach 15 to 18% of a growing revenue base.
Margin Expansion Has Room to Continue
Willdan's adjusted EBITDA margin has expanded from 15.7% in FY2021 to 21.8% in FY2025, a 610 basis point improvement over four years (Willdan earnings releases, FY2021-FY2025). The company guided FY2026 margins to also exceed the 20% target, with the midpoint of EBITDA guidance ($87.5 million) on the midpoint of revenue guidance ($397.5 million) implying roughly 22%.
The margin story has structural legs. Willdan is deliberately moving "up the value scale," as Bieber described it on the earnings call, shifting project mix toward higher-margin consulting and engineering work and away from lower-margin subcontractor pass-through. The APG acquisition and the growing data center practice represent exactly this kind of high-value work. Power engineering for hyperscalers is not commoditized labor.
Free cash flow conversion is equally impressive. The $71 million in FY2025 free cash flow represents approximately 90% conversion of adjusted EBITDA (Willdan Q4 FY2025 earnings release). For a professional services business, that level of cash conversion is exceptional. It reflects low capital intensity (no factories, no heavy equipment), working capital discipline, and multi-year contracts that provide billing visibility.
The net cash position ($17 million as of year-end FY2025) gives Willdan optionality. The company completed three acquisitions in FY2025, and Bieber noted "a particularly strong acquisition pipeline entering 2026" on the earnings call. With $71 million in annual free cash flow and no net debt, the company can self-fund tuck-in acquisitions that expand capabilities without diluting shareholders or loading up the balance sheet.
“Strong EPS growth allowed us to generate $71 million of free cash flow, and we are now in a net cash position.”
Mike Bieber, President and CEO — Q4 FY2025 earnings call, February 26, 2026
Data center work scales faster than expected, utility mandates expand, acquisition pipeline executes well. Clear Street's $135 target reflects this scenario.
Company delivers on FY2026 guidance, data center opportunity builds steadily, margins hold above 20%. Consensus target of ~$123 implies this outcome.
Key utility contract losses, regulatory rollback of efficiency mandates, or acquisition missteps compress margins back to mid-teens.
| WACC \ Exit | 20x | 25x | 30x |
|---|---|---|---|
| 9.0% | $142 | $155 | $168 |
| 10.5% | $108 | $125 | $140 |
| 12.0% | $82 | $98 | $112 |
The Risks
The Bottom Line
Willdan Group at $80 is a 20%+ organic grower with margins expanding past 20%, a net cash balance sheet, $71 million in free cash flow, and exposure to the three biggest structural spending themes in U.S. energy: grid modernization, state efficiency mandates, and data center electricity demand. The stock trades at roughly 16x FY2026 guided adjusted EPS. The analyst consensus target sits at approximately $123, implying 54% upside. Clear Street raised its price target to $135 from $125 after Q4 results (TipRanks, March 2026).
The thing to watch is the Q1 FY2026 earnings report (scheduled for May 7, 2026). The Q4 beat was extraordinary, and the market will want to see whether the margin trajectory and data center pipeline momentum are sustainable or whether Q4 was a timing-driven outlier. If APG-related commercial revenue shows the doubling Bieber promised, and EBITDA margins hold above 20%, the stock has significant room to re-rate toward the $100 to $130 range. I am bullish.