Fundamental Facts for WEC Energy Investors

We've been asking ourselves recently if the market has placed a fair valuation on WEC Energy. Let's dive into some of the fundamental values of this large-cap Utilities company to determine if there might be an opportunity here for value-minded investors.

WEC Energy's Valuation Is in Line With Its Sector Averages:

WEC Energy Group, Inc., through its subsidiaries, provides regulated natural gas and electricity, and renewable and nonregulated renewable energy services in the United States. The company belongs to the Utilities sector, which has an average price to earnings (P/E) ratio of 22.89 and an average price to book (P/B) ratio of 1.03. In contrast, WEC Energy has a trailing 12 month P/E ratio of 19.4 and a P/B ratio of 2.23.

WEC Energy's PEG ratio is 3.14, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.

Wider Gross Margins Than the Industry Average of 35.4%:

2018-02-28 2019-02-26 2020-02-27 2021-02-25 2022-02-24 2023-02-23
Revenue (MM) $7,648 $7,680 $7,523 $7,242 $8,316 $9,597
Gross Margins 63.0% 62.0% 64.0% 68.0% 60.0% 55.0%
Operating Margins 23% 19% 20% 24% 21% 20%
Net Margins 16.0% 14.0% 15.0% 17.0% 16.0% 15.0%
Net Income (MM) $1,205 $1,060 $1,135 $1,201 $1,302 $1,409
Net Interest Expense (MM) -$416 -$445 -$502 -$494 -$471 -$515
Depreciation & Amort. (MM) -$799 -$846 -$926 -$976 -$1,074 -$1,123
Earnings Per Share $3.79 $3.34 $3.58 $3.79 $4.11 $4.45
EPS Growth n/a -11.87% 7.19% 5.87% 8.44% 8.27%
Diluted Shares (MM) 317 317 317 316 316 316
Free Cash Flow (MM) $4,014 $4,549 $4,569 $4,414 $4,264 $4,326
Capital Expenditures (MM) -$1,936 -$2,104 -$2,223 -$2,218 -$2,231 -$2,265
Net Current Assets (MM) -$19,885 -$21,386 -$22,604 -$27,893 n/a n/a

WEC Energy has strong margins with a stable trend, wider gross margins than its peer group, and positive EPS growth. Furthermore, WEC Energy has weak revenue growth and a flat capital expenditure trend and irregular cash flows.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.