Willdan Group Vs Sterling Infrastructure: Which Engineering Stock is the Better Investment?

Core Insights - Willdan Group and Sterling Infrastructure exceeded Q2 expectations, reporting record revenue and net income driven by strong performance in high-growth infrastructure sectors [1][2] - Both companies raised their full-year guidance following strong Q2 results, indicating confidence in continued growth [3] Willdan Group Summary - Willdan raised its full-year targets for net revenue to $340-$350 million, Adjusted EPS to $3.50-$3.65, and Adjusted EBITDA to $70-$73 million [4] - The company secured significant contracts, including a $30 million deal with the City of Fairfield and a $20 million contract with National Grid [4] - Willdan's stock has increased nearly +200% year to date, with a three-year growth of over +380% [9] Sterling Infrastructure Summary - Sterling raised its full-year revenue guidance to $2.10-$2.15 billion, net income to $243-$252 million, and adjusted EPS to $9.21-$9.47 [5] - The company has a backlog exceeding $2 billion, focusing on high-margin projects in states like Utah, Colorado, and Texas [5] - Sterling's stock has risen over +70% year to date, with a three-year increase of over +260% [9] Strategic Acquisitions - Both companies are expanding into data center infrastructure, capitalizing on advancements in artificial intelligence [6] - Willdan acquired Alternative Power Generation to enhance its capabilities for AI data centers and EV charging stations [7] - Sterling plans to acquire CEC Facilities Group to expand its electrical contracting services for semiconductors and data centers [8] Valuation Analysis - Both companies forecast high-double digit EPS growth, with Sterling having a P/E valuation of 34X forward earnings compared to Willdan's 40.3X [10] - Willdan's stock is closer to an optimal sales level of less than 2X, while Sterling's is at 4.3X [11] - Despite raising guidance, Willdan's top line is expected to dip at least 38% after a record year, while Sterling is projected to maintain or reach peak annual sales [11] Conclusion - Willdan Group and Sterling Infrastructure are positioned as top engineering companies for investment, with Sterling's stronger financials offering more appeal [12] - Both companies' ventures into data center infrastructure suggest long-term viability as investments [13]