Core Insights - Willdan Group (WLDN) is experiencing strong momentum as it approaches the end of 2025, with investor focus on whether its expanding deal pipeline can lead to solid EPS growth in 2026 [1] Financial Performance - In Q3 2025, contract revenue increased by 15% year over year to $182 million, while net revenue rose by 26% year over year to $95 million [2] - Adjusted EBITDA surged by 53% year over year to $23.1 million, and adjusted diluted EPS jumped by 66% year over year to $1.21 [2] - For the first nine months of 2025, adjusted EPS nearly doubled to $3.34, indicating margin expansion and effective cost control [2] Growth Opportunities - The earnings call emphasized a "strong pipeline of opportunities" being converted into contracts, with recent significant wins including a two-year, $97 million project in Alameda County [3] - The APG acquisition is expected to drive over 50% growth for that unit in 2026, supported by a record backlog [3][6] - Structural demand from utilities, commercial customers, and governments is increasing due to electricity load growth from data centers, electrification, and grid modernization, positioning Willdan's Energy segment, which accounts for approximately 85% of revenue, to benefit [4] Financial Position - Willdan has reduced its net debt to $16 million, maintaining a leverage ratio of 0.2x adjusted EBITDA, which provides financial flexibility for further acquisitions [5] - The pending Compass Municipal Advisors deal, expected to close on January 1, 2026, will expand Willdan's municipal advisory footprint [5] Competitive Landscape - Willdan faces competition from ICF International and Tetra Tech in the energy and infrastructure consulting space, both of which are involved in utility advisory work and government-funded energy projects [7] - ICF International has a strong presence in utility consulting and energy efficiency program management, benefiting from large federal and state contracts [8] - Tetra Tech is a major engineering and consulting firm with capabilities in power, water, and environmental services, competing for similar projects as Willdan [9] - Willdan's concentrated exposure to data center-driven electricity demand may provide a sharper earnings catalyst compared to its competitors [10] Stock Performance and Valuation - Willdan's shares have decreased by 6.5% over the past six months, underperforming the Zacks Business - Services industry's 22.9% decline [11] - The stock is currently trading at a forward 12-month P/E ratio of 24.86, which is a premium compared to industry peers [15] - Earnings estimates for fiscal 2026 imply a year-over-year growth of 9.6%, with the current consensus estimate for adjusted EPS at $4.53 [16]