WEG (WEGZY) AI Stock Analysis

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WEG

(OTC:WEGZY)

72Outperform

WEGZY is a financially strong company with significant revenue growth and profitability. Positive earnings call results contribute to a favorable outlook. However, technical indicators suggest caution due to bearish trends, and valuation metrics imply the stock may be overvalued. Despite these concerns, the company's robust financials and strategic initiatives support a solid overall score.

WEG (WEGZY) vs. S&P 500 (SPY)

Market Cap

$31.01B

Dividend Yield0.78%

Average Volume (3M)40.92K

Price to Earnings (P/E)28.0

Beta (1Y)0.84

Revenue Growth7.96%

EPS Growth-2.52%

CountryUS

Employees47,529

SectorIndustrials

Sector Strength63

IndustryIndustrial - Machinery

Share Statistics

EPS (TTM)0.27

Shares Outstanding4,197,318,000

10 Day Avg. Volume19,449

30 Day Avg. Volume40,924

Financial Highlights & Ratios

PEG Ratio2.12

Price to Book (P/B)N/A

Price to Sales (P/S)5.76

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

WEG Business Overview & Revenue Model

Company DescriptionWEG S.A. engages in the production and sale of capital goods in Brazil and internationally. The company offers electric motors, generators, and transformers; gear units and geared motors; hydraulic and steam turbines; frequency converters; motor starters and maneuver devices; control and protection of electric circuits for industrial automation; power sockets and switches; and electric traction solutions for heavy vehicles, SUV vehicles, locomotives, and sea transportation capital goods. It also provides solutions for the generation of renewable and distributed energy through hydro, thermal biomass, wind, and solar energy power plants; solutions for various industry; UPSs and alternators for groups of generators; conventional and movable electric substations; industrial electro electronic equipment systems; industrial paint and varnish; and paints for automotive repainting. WEG S.A. was founded in 1961 and is headquartered in Jaragua do Sul, Brazil.

How the Company Makes MoneyWEG makes money through the sale of its electric-electronic equipment, which constitutes the primary revenue stream. The company offers a broad portfolio of products, such as electric motors, generators, and transformers, catering to industries like oil and gas, mining, and renewable energy. WEG also generates revenue from providing technical services and maintenance solutions, ensuring the longevity and efficiency of its products. Strategic partnerships and long-term contracts with major industrial players further enhance its revenue stability. Additionally, the company's focus on research and development enables it to introduce new products and technologies, maintaining its competitive edge and driving growth in emerging markets.

WEG Financial Statement Overview

Summary

WEG exhibits strong financial health with impressive revenue growth, solid profitability, low leverage, and robust cash generation. The company is well-positioned for future growth and stability, supported by a consistent increase in stockholders' equity and efficient cash flow conversion.

Income Statement

Very Positive

WEG has demonstrated strong revenue growth with a consistent upward trajectory over the years, reflected by a substantial revenue growth rate of 16.9% over the past year. The company maintains solid profitability with a gross profit margin of 33.7% and a net profit margin of 15.9%. Although EBIT margin data was missing for the latest year, historical performance indicates efficient operations. The EBITDA margin at 23.4% further underscores robust operational performance.

Balance Sheet

Very Positive

The balance sheet reflects a strong financial position with a debt-to-equity ratio of 0.20, indicating low leverage. The equity ratio of 53.5% suggests a healthy proportion of assets funded by equity. ROE stands at a commendable 27.2%, showcasing effective utilization of equity to generate profits. The company displays financial stability with a consistent increase in stockholders' equity over time.

Cash Flow

Very Positive

WEG's cash flow performance is solid, with a positive free cash flow growth rate of 0.7% and a robust operating cash flow to net income ratio of 1.2. The free cash flow to net income ratio of 0.89 indicates efficient conversion of profits into cash. The company maintains strong cash generation capabilities, supporting its operational and investment activities.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
37.99B	32.50B	29.90B	23.56B	17.47B
	Gross Profit
12.81B	10.80B	8.70B	6.96B	5.44B
	EBIT
0.00	6.49B	4.94B	4.33B	2.71B
	EBITDA
8.89B	7.37B	5.76B	4.90B	3.27B
	Net Income Common Stockholders
6.04B	5.73B	4.21B	3.59B	2.34B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
8.00B	7.08B	4.98B	3.22B	4.48B
	Total Assets
41.49B	31.50B	28.13B	23.93B	19.93B
	Total Debt
4.42B	3.39B	4.01B	2.11B	1.97B
	Net Debt
-2.93B	-3.10B	-441.68M	-602.80M	-1.92B
	Total Liabilities
18.36B	13.64B	12.89B	9.92B	8.00B
	Stockholders Equity
22.20B	17.34B	14.83B	13.60B	11.56B
Cash Flow		Free Cash Flow
5.40B	5.36B	1.81B	92.04M	3.37B
	Operating Cash Flow
7.25B	7.02B	2.98B	939.38M	3.93B
	Investing Cash Flow
-4.09B	-1.71B	-1.35B	-683.87M	207.38M
	Financing Cash Flow
-2.76B	-2.96B	191.91M	-1.44B	-2.36B

WEG Technical Analysis

Technical Analysis Sentiment

Negative

Last Price7.49

Price Trends

50DMA

8.57

Negative

100DMA

8.81

Negative

200DMA

8.96

Negative

Market Momentum

MACD

-0.18

Positive

RSI

35.21

Neutral

STOCH

1.04

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WEGZY, the sentiment is Negative. The current price of 7.49 is below the 20-day moving average (MA) of 8.08, below the 50-day MA of 8.57, and below the 200-day MA of 8.96, indicating a bearish trend. The MACD of -0.18 indicates Positive momentum. The RSI at 35.21 is Neutral, neither overbought nor oversold. The STOCH value of 1.04 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WEGZY.

WEG Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOV	77 Outperform	$21.05B	7.90	24.30%	1.34%	-2.99%	159.26%
AME	76 Outperform	$35.23B	25.76	14.97%	0.75%	5.22%	4.46%
CMI	73 Outperform	$38.24B	9.79	41.27%	2.57%	0.14%	444.36%
WEGZY	72 Outperform	$31.01B	28.05	31.26%	0.78%	7.96%	-2.52%
ROK	69 Neutral	$25.68B	28.26	26.22%	2.25%	-11.28%	-23.69%
OTIS	68 Neutral	$37.66B	23.35	-33.93%	1.64%	0.37%	19.87%
Sector *	62 Neutral	$7.24B	12.39	3.08%	3.39%	3.63%	-14.35%

* Industrials Sector Average

Performance Comparison

WEGZY

WEG

7.46

-0.19

-2.48%

AME

Ametek

153.33

-26.67

-14.82%

CMI

Cummins

275.67

-19.93

-6.74%

DOV

Dover

151.47

-23.98

-13.67%

ROK

Rockwell Automation

227.62

-53.94

-19.16%

OTIS

Otis Worldwide

91.96

-5.58

-5.72%

WEG Earnings Call Summary

Earnings Call Date: Feb 26, 2025 | % Change Since: -17.05% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

The earnings call reflected strong revenue growth and strategic expansion, particularly in international markets and through acquisitions, contributing to a positive outlook. However, challenges such as margin pressure from product mix and slower sales in key segments indicate areas of concern.

Highlights

Strong Revenue Growth

Net operating revenue grew by 26.4% compared to 4Q '23, driven by strong performance in Brazil's transmission and distribution projects and centralized solar generation projects.

Record EBITDA Increase

EBITDA reached R$ 2.4 billion, marking a 30.5% increase compared to 4Q '23, with an EBITDA margin of 22.1%, up by 0.7 percentage points from the previous year.

International Market Expansion

Positive demand in international markets, particularly in North America and Europe, with growth in power generation, transmission, and distribution businesses.

Strategic Acquisitions

Acquisitions of REIVAX and Volt Electric Motors to expand WEG's industrial footprint in power generation control systems and electric motors.

Investment in Capacity Expansion

Announced investment of $62 million to expand production capacity in China, and construction of a new gearbox factory in Turkey with an investment of €28 million.

Lowlights

Margin Pressure from Product Mix

The quarter experienced margin pressure due to a change in product mix, particularly from the increased relevance of the solar generation business, which has lower margins.

Challenges in Commercial Motors and Appliances

Slowdown in sales in key markets like North America and Argentina impacted revenue growth despite positive contributions from operations in China.

Decreased Return on Invested Capital

Return on invested capital reduced by 5 percentage points compared to 4Q '23, due to nonrecurring effects and increased invested capital.

Company Guidance

During WEG's Fourth Quarter 2024 Earnings Conference Call, the company reported a 26.4% increase in net operating revenue compared to the same quarter in 2023. EBITDA rose by 30.5% to R$ 2.4 billion, with an EBITDA margin of 22.1%, up by 0.7 percentage points from the previous year. Return on invested capital remained high at 34.2%, although it saw a reduction of 5 percentage points due to nonrecurring effects and increased invested capital. The company's performance was bolstered by strong demand across various sectors, particularly in long-cycle equipment such as transmission and distribution projects. Additionally, recent acquisitions contributed to the revenue growth. Despite challenges and uncertainties in the global macroeconomic environment, WEG maintained a positive outlook for future growth and operational efficiency.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.