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Blowing away their Q2 expectations last week, Willdan Group (WLDN - Free Report) and Sterling Infrastructure (STRL - Free Report) both reported record revenue and net income for the quarter, driven by their exceptional execution in high-growth infrastructure sectors.

Willdan is capitalizing on strong demand for energy infrastructure, with Sterling seeing increased demand for its digital infrastructure and transportation solutions.

With both companies riding on powerful secular trends, investors may be wondering which of these engineering stocks is the better investment.

Willdan & Sterling’s Raised Guidance
 

Notably, steady revenue from states and municipal contracts led to Willdan and Sterling raising their full-year guidance following their strong Q2 reports.

Willdan increased its full-year targets for net revenue ($340-$350 million), Adjusted EPS ($3.50-$3.65), and Adjusted EBITDA ($70-$73 million). This comes as Willdan has secured a $30 million contract with the City of Fairfield (California), a $20 million deal with National Grid (NGG - Free Report), and a multi-year contract with the Los Angeles Department of Water and Power.

Pivoting to Sterling, the company raised its full-year revenue guidance ($2.10-$2.15 billion), net income ($243-252 million), and adjusted EPS ($9.21-$9.47) forecasts. It’s noteworthy that Sterling’s backlog sits at over $2 billion, having a focus on high-margin projects, including roadway projects in Utah, Colorado, and Texas.

Strategic Acquisitions – AI & EV Expansion
 

Outside of showing the ability to consistently beat earnings expectations and raise their forecasts, Willdan and Sterling have lifted investor sentiment through strategic acquisitions. Specifically, they have fueled their expansion into data center infrastructure, capitalizing on the advancement of artificial intelligence.

In this regard, Willdan acquired Alternative Power Generation (APG) in March, which will enhance its ability to serve commercial electric loads and complex grid interconnection needs for AI data centers and EV charging stations as well.

Similarly, Sterling Infrastructure has planned to acquire CEC Facilities Group later in the year, a provider of electrical and mechanical services that will expand its reach into mission-critical electrical contracting for semiconductors and data centers. Furthermore, Sterling has already proven its ability to build out EV infrastructure, working on EV manufacturing facilities in Georgia for Hyundai (HYMLF - Free Report) and Rivian (RIVN - Free Report).

Willdan & Sterling’s Blazing Stock Performances
 

As two of the market’s top performers, Willdan’s stock has skyrocketed nearly +200% year to date to around $112 a share, with Sterling shares up over +70% to just under $300. More impressive, over the last three years, WLDN and STRL are up over +380% and +260%, respectively.
 

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WLDN & STRL Valuation Analysis
 

Correlating with their blazing stock performances, both companies' forecasts now call for high-double digit EPS growth this year, but Sterling has the slight edge in terms of P/E valuation at 34X forward earnings compared to Willdan’s 40.3X.

That said, Willdan’s stock is closer to the optimum level of less than 2X sales, with Sterling at 4.3X. However, despite raising its full-year revenue guidance, Willdan’s top line is expected to dip at least 38% after a record year that saw annual sales at $566 million, while Sterling is now projected to tie or reach another peak in annual sales. 
 

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Conclusion & Final Thoughts 
 

There is no doubt that Willdan Group and Sterling Infrastructure have become two of the top engineering companies to invest in. For now, Sterling‘s more robust top and bottom lines may offer better appeal to investors, especially considering its proven track record of expanding outside of traditional physical infrastructure projects with EV manufacturing facilities.

Still, Sterling and Willdan’s push into data center infrastructure should make both stocks viable long-term investments.

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