Wec Energy Group, Inc. (NYSE: WEC)

Sector: Utilities Industry: Utilities - Regulated Electric CIK: 0000783325
Market Cap 36.39 Bn
P/B 3.38
P/E 28.93
P/S 4.65
ROIC (Qtr) 6.17
Div Yield % 3.06
Rev 1y % (Qtr) 12.91
Total Debt (Qtr) 21.19 Bn
Debt/Equity (Qtr) 1.56
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About

WEC Energy Group, Inc., often referred to as WEC, is a diversified holding company that operates in the energy industry. The company's operations are centered on the generation, transmission, and distribution of electricity and natural gas. WEC Energy Group is a significant player in the energy industry, with a diverse portfolio of assets and a commitment to reducing its carbon emissions. The company's main business activities include the generation, transmission, and distribution of electricity and natural gas. WEC Energy Group operates in the...

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Investment thesis

Bull case

  • Tangible assets of 46.76B provide exceptional 146.89x coverage of deferred revenue 318.30M, showing strong service capability backing.
  • Operating cash flow of 3.54B provides strong 11.11x coverage of deferred revenue 318.30M, indicating service delivery capability.
  • Tangible assets of 46.76B provide robust 48.14x coverage of other current liabilities 971.30M, indicating strong asset backing.
  • Operating cash flow of 3.54B provides strong 4.20x coverage of inventory 842.80M, indicating efficient inventory management.
  • Operating cash flow of 3.54B provides solid 0.70x coverage of current liabilities 5.05B, showing strong operational health.

Bear case

  • Operating cash flow of 3.54B barely covers its investment activities of (5.32B), with a coverage ratio of -0.66, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 51.10M against inventory of 842.80M, the 0.06 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 3.54B provides thin coverage of dividend payments of (1.12B) with a -3.15 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 51.10M provide limited coverage of acquisition spending of (1.44B), which is -0.04x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of (404.20M) provides weak coverage of capital expenditures of 3.94B, with a -0.10 ratio suggesting additional external financing needs for growth initiatives.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Utilities - Regulated Electric
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NEE Nextera Energy Inc 191.44 Bn 28.01 6.98 95.62 Bn
2 SO Southern Co 97.42 Bn 30.98 4.46 73.75 Bn
3 AEP American Electric Power Co Inc 64.38 Bn 33.83 4.24 0.00 Bn
4 DUK Duke Energy CORP 56.47 Bn 30.61 3.87 89.65 Bn
5 EXC Exelon Corp 48.53 Bn 17.53 2.00 50.08 Bn
6 ETR Entergy Corp /De/ 45.74 Bn 25.29 3.59 30.45 Bn
7 PEG Public Service Enterprise Group Inc 43.93 Bn 35.35 4.41 23.51 Bn
8 XEL Xcel Energy Inc 41.10 Bn 37.21 3.75 35.52 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.02 1.01
EV to Cash from Ops. EV/CFO 26.65 12.45
EV to Debt EV to Debt 2.39 171.92
EV to EBIT EV/EBIT 25.90 19.12
EV to EBITDA EV/EBITDA 18.71 15.67
EV to Free Cash Flow [EV/FCF] EV/FCF -160.24 -28.25
EV to Market Cap EV to Market Cap 1.39 1.84
EV to Revenue EV/Rev 6.47 4.72
Price to Book Value [P/B] P/B 3.38 2.60
Price to Earnings [P/E] P/E 28.93 18.53
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.51 1.94
Dividend Payout Ratio % Div Payout % (Qtr) 66.00 62.23
Dividend per Basic Share Div per Share (Qtr) 3.51 2.02
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -281.35 -218.37
Interest Coverage Int. cover (Qtr) 3.11 2.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -47.12 -68.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -84.16 73.92
Dividend Growth (1y) % Div 1y % (Qtr) 6.97 4.05
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 25.77 15.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 18.24 13.33
EBIT Growth (1y) % EBIT 1y % (Qtr) 21.64 15.81
EBT Growth (1y) % EBT 1y % (Qtr) 26.79 19.29
EPS Growth (1y) % EPS 1y % (Qtr) 30.07 21.26
FCF Growth (1y) % FCF 1y % (Qtr) -193.69 -35.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 12.41 11.97
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.19 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.15 0.11
Cash Ratio Cash Ratio (Qtr) 0.01 0.98
Current Ratio Curr Ratio (Qtr) 0.50 2.72
Debt to Equity Ratio Debt/Equity (Qtr) 1.56 1.45
Interest Cover Ratio Int Coverage (Qtr) 3.11 2.83
Times Interest Earned Times Interest Earned (Qtr) 3.11 2.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 44.00 37.94
EBIT Margin % EBIT Margin % (Qtr) 28.88 316.94
EBT Margin % EBT Margin % (Qtr) 19.60 14.36
Gross Margin % Gross Margin % (Qtr) 40.20 41.20
Net Profit Margin % Net Margin % (Qtr) 17.70 12.57