Electricity Demand And Decarbonization Will Reshape Energy Infrastructure

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AnalystConsensusTarget
Consensus Narrative from 2 Analysts
Published
24 Sep 24
Updated
06 Aug 25
AnalystConsensusTarget's Fair Value
US$94.00
6.4% undervalued intrinsic discount
06 Aug
US$88.02
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142.9%
7D
6.5%

Author's Valuation

US$94.0

6.4% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update06 Aug 25
Fair value Increased 28%

The significant upward revision in Willdan Group’s fair value reflects higher investor optimism, as evidenced by rising future P/E and discount rates, resulting in an increased consensus price target from $73.50 to $94.00.


What's in the News


  • Willdan Group was added to multiple Russell indexes, including the Russell 2000 Growth, Russell 2500 Growth, Russell 3000 Growth, Russell Small Cap Comp Growth, Russell Microcap Growth, Russell 3000E Growth, and related defensive/value indexes.
  • The Board approved Crowe as the independent registered public accounting firm for fiscal year 2025.
  • The company raised fiscal year 2025 earnings guidance, expecting net revenue between $325 million and $335 million.

Valuation Changes


Summary of Valuation Changes for Willdan Group

  • The Consensus Analyst Price Target has significantly risen from $73.50 to $94.00.
  • The Future P/E for Willdan Group has significantly risen from 29.89x to 38.66x.
  • The Discount Rate for Willdan Group has risen from 6.71% to 7.10%.

Key Takeaways

  • Rising demand for energy infrastructure and sustainability aligns with Willdan’s solutions, fueling strong growth, multi-year contracts, and enhanced revenue visibility.
  • Expansion into technology-driven services and disciplined cost management are driving recurring revenues, margin improvements, and gains in profitability.
  • Heavy reliance on public sector contracts, project timing risks, industry competition, and rising labor costs threaten revenue stability, margin strength, and long-term earnings predictability.

Catalysts

About Willdan Group
    Provides professional, technical, and consulting services primarily in the United States.
What are the underlying business or industry changes driving this perspective?
  • Accelerating electricity demand from AI/data centers and electrification of buildings/transportation is creating a structural increase in energy infrastructure needs, materially expanding Willdan’s project pipeline and supporting sustained double-digit organic revenue growth.
  • Heightened urgency for decarbonization, energy efficiency, and sustainability from utilities, commercial clients, and government entities—driven by environmental policies, ESG mandates, and local/state-level funding—directly aligns with Willdan’s core service offerings and is expected to deliver multi-year contract opportunities, positively impacting future revenues and revenue visibility.
  • Expansion into higher-margin, technology-driven services (like smart energy analytics, grid optimization, and advanced engineering solutions), combined with cross-selling from recent strategic acquisitions in key growth verticals such as data centers, is expected to further increase recurring revenues and drive margin expansion.
  • A growing base of large, multi-year utility and municipal contracts (e.g., the $330M LADWP program ramping up in late 2025) provides substantial forward revenue visibility and operating leverage, which could support improved EBITDA margins and earnings growth as these contracts ramp.
  • Effective cost discipline, scalable infrastructure, and ongoing investments in analytics and program management are enhancing operating leverage, which, combined with strong organic growth, is likely to drive continued gains in both net margins and earnings per share.

Willdan Group Earnings and Revenue Growth

Willdan Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Willdan Group's revenue will grow by 11.0% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 4.1% today to 5.9% in 3 years time.
  • Analysts expect earnings to reach $47.8 million (and earnings per share of $2.97) by about July 2028, up from $24.3 million today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 29.9x on those 2028 earnings, down from 47.3x today. This future PE is greater than the current PE for the US Professional Services industry at 23.7x.
  • Analysts expect the number of shares outstanding to grow by 3.59% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 6.71%, as per the Simply Wall St company report.

Willdan Group Future Earnings Per Share Growth

Willdan Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Exposure to tariff risks on specialized equipment could lead to significant price escalations or project delays if costs rise and equipment becomes uneconomical; while not yet material, this uncertain environment could impact project profitability and timing, affecting future margins and earnings.
  • A large portion of Willdan’s revenue is from state and local governments and utilities, but only 15% is forecasted from commercial customers; this ongoing reliance on public sector clients exposes the company to volatile funding environments and economic downturns in municipal finance, potentially causing unpredictable revenue streams and higher earnings volatility.
  • Revenue concentration remains high with large multiyear contracts (e.g., the $330M LADWP contract), and delays or gaps in the ramp-up and execution of such projects can result in short-term revenue swings and operating leverage compression, making earnings and revenue less predictable.
  • Intense competition and consolidation within the engineering, energy, and consulting industries may result in more aggressive pricing, lower project win rates, and margin pressure, especially as larger competitors seek to win turnkey or integrated solutions from Willdan’s client base, directly impacting revenue growth and net margin.
  • Wage inflation, increased demand for highly skilled engineers, and higher incentive compensation tied to recent stock gains have already pressured G&A expenses; if Willdan is unable to continue attracting and retaining technical talent amid a competitive labor market, this could lead to rising costs and depressed net margins in the long term.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of $73.5 for Willdan Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $85.0, and the most bearish reporting a price target of just $62.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $815.5 million, earnings will come to $47.8 million, and it would be trading on a PE ratio of 29.9x, assuming you use a discount rate of 6.7%.
  • Given the current share price of $79.31, the analyst price target of $73.5 is 7.9% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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