Willdan Group suffered from a bout with the coronavirus, but it is better now. Its stock has yet to get full credit for that recovery, according to Tasesik Yoon, who edits the Forbes Special Situation Survey and Forbes Investor newsletters, giving investors a chance to buy in at about the pre-pandemic price.
The provider of consulting services to companies and governments was going great as 2020 began, with expected profit growth ranging up to 15%. The pandemic took a bite out of business that year, hitting Willdan’s utility consulting operations hard because much of the work is conducted at customer locations.
A record amount of new work, primarily six energy-efficiency contracts with utilities in its home state of California signed in November 2020 also was delayed. Combined with the disruptions in existing business, Yoon says, that has ushered in a temporary period of reduced revenue and profitability as the new projects slowly get up to speed.
While Willdan’s results this year reflect that slack spell, Yoon thinks investors are missing the forest for the trees. In particular, those California contracts will generate only about $50 million on the top line this year but reach an annual pace of $150-$200 million in 2023, as much as doubling 2021 revenue. This expected growth is also reflected in the healthy business backlog of $1.2 billion tho which these contracts have contributed. Along with the increasingly greater margins Willdan should realize on this backlog as theses contracts mature, the stage is set for substantial profit growth in coming years.