WEG (WEGZY) AI Stock Analysis

• Market Cap: $41.76B
• Dividend Yield: 1.85%
• Average Volume (3M): 25.10K
• Price to Earnings (P/E): 36.0
• Beta (1Y): 0.64
• Revenue Growth: 5.17%
• EPS Growth: -3.66%
• Country: US
• Employees: 47,529
• Sector: Industrials
• Sector Strength: 72
• Industry: Industrial - Machinery
• EPS (TTM): 0.07
• Shares Outstanding: 4,197,318,000
• 10 Day Avg. Volume: 17,152
• 30 Day Avg. Volume: 25,104
• PEG Ratio: 7.83
• Price to Book (P/B): 10.89
• Price to Sales (P/S): 6.37
• P/FCF Ratio: 44.77
• Enterprise Value/Market Cap: 5.14
• Enterprise Value/Revenue: 5.19
• Enterprise Value/Gross Profit: 15.80
• Enterprise Value/Ebitda: 21.49
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 76 Outperform
• Price Target: $11.50 ▲(35.45% Upside)

WEGZY's overall score is driven by strong financial performance and positive technical indicators. While the stock is trading at a premium valuation, strategic investments and a balanced earnings call sentiment support future growth prospects. Challenges in specific segments and tariff impacts are notable risks.

Positive Factors

High Profitability Margins

Sustained gross and operating margins reflect scale, efficient manufacturing and pricing power across motors, transformers and automation. These durable margins support internal funding for capex, R&D and acquisitions, and provide a structural cushion through industrial cycles.

Prudent Balance Sheet and Strong ROE

Low leverage and a high ROE indicate disciplined capital allocation and strong returns on shareholders' equity. This balance-sheet strength preserves financial flexibility to pursue strategic investments and absorb cyclical downturns over the next several quarters.

Robust Free Cash Flow Generation

Consistent FCF growth and a high FCF-to-income ratio show the business converts earnings into cash reliably. Durable cash generation reduces reliance on external funding, enabling sustained capex, acquisitions and shareholder returns across the medium term.

Negative Factors

Weakness in Renewables Revenue

Material declines in wind and related solar revenues signal reduced exposure to a previously high-growth segment. Over a 2-6 month horizon this can slow diversification and growth profile, pressuring segment contribution until new project pipelines recover.

Tariff-driven Cost and Margin Pressure in U.S.

Persistent U.S. tariffs alter competitive dynamics, forcing price adjustments or margin compression on U.S. sales. This structural policy risk can make North American operations more capital intensive and reduce profitability durability over coming quarters.

Rising Invested Capital and Cash Conversion Limits

Significant recent capex and acquisitions (BRL 1.1bn plant, BRL 673m investments and a controlling stake purchase) have raised invested capital and slightly lowered ROIC. Combined with a 45.3% OCF-to-income ratio, this may pressure near-term cash efficiency and reinvestment returns.

WEG Business Overview & Revenue Model

Company Description

WEG 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 Money

WEG generates revenue through the sale of its core products, which include electric motors, variable speed drives, transformers, and automation equipment. The company also earns income from providing maintenance services and technical support for its products. Key revenue streams come from both domestic and international markets, with significant exports contributing to overall sales. WEG has established partnerships with various industries and governments, enhancing its market presence and allowing it to tap into emerging sectors, particularly in renewable energy, which further bolsters its earnings.

WEG Financial Statement Overview

Summary

WEG demonstrates strong financial health with consistent revenue and profit growth, efficient operational management, and a solid balance sheet. The company effectively manages its leverage and generates healthy cash flows, positioning it well for future growth. However, there is potential to enhance cash flow efficiency further.

Income Statement

WEG has demonstrated strong revenue growth with a TTM revenue increase of 1.2% and a consistent upward trajectory over the past years. The company maintains healthy profitability margins, with a TTM gross profit margin of 32.8% and a net profit margin of 15.7%. The EBIT and EBITDA margins are also robust at 21.8% and 24.2% respectively, indicating efficient operational management.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.21, suggesting prudent leverage management. The return on equity is impressive at 29.4%, indicating strong shareholder returns. However, the equity ratio is not explicitly provided, which limits a complete assessment of asset financing.

Cash Flow

WEG's cash flow performance is commendable, with a TTM free cash flow growth of 13.1% and a free cash flow to net income ratio of 63.5%, highlighting effective cash generation relative to earnings. The operating cash flow to net income ratio is moderate at 45.3%, suggesting room for improvement in cash flow efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	41.38B	37.99B	32.50B	29.90B	23.56B	17.47B
Gross Profit	13.58B	12.81B	10.80B	8.70B	6.96B	5.44B
EBITDA	9.98B	8.89B	7.37B	5.76B	4.90B	3.27B
Net Income	6.48B	6.04B	5.73B	4.21B	3.59B	2.34B
Balance Sheet
Total Assets	41.49B	41.49B	31.50B	28.13B	23.93B	19.93B
Cash, Cash Equivalents and Short-Term Investments	7.34B	8.00B	7.08B	4.98B	3.22B	4.48B
Total Debt	4.62B	4.42B	3.39B	4.01B	2.11B	1.97B
Total Liabilities	18.08B	18.36B	13.64B	12.89B	9.92B	8.00B
Stockholders Equity	22.41B	22.20B	17.34B	14.83B	13.60B	11.56B
Cash Flow
Free Cash Flow	4.33B	5.40B	5.36B	1.81B	92.04M	3.37B
Operating Cash Flow	6.82B	7.25B	7.02B	2.98B	939.38M	3.93B
Investing Cash Flow	-3.07B	-4.09B	-1.71B	-1.35B	-683.87M	207.38M
Financing Cash Flow	-2.65B	-2.76B	-2.96B	191.91M	-1.44B	-2.36B

WEG Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 8.49
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WEGZY, the sentiment is Positive. The current price of 8.49 is below the 20-day moving average (MA) of 8.93, below the 50-day MA of 8.60, and above the 200-day MA of 7.51, indicating a bullish trend. The MACD of 0.28 indicates Negative momentum. The RSI at 80.09 is Negative, neither overbought nor oversold. The STOCH value of 100.10 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WEGZY.

WEG Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOV	79 Outperform	$28.49B	12.77	15.88%	1.04%	-5.24%	45.69%
WEGZY	76 Outperform	$41.76B	36.01	29.08%	1.85%	5.17%	-3.66%
PNR	75 Outperform	$17.68B	27.41	17.97%	0.96%	0.83%	-1.32%
ROK	71 Outperform	$47.27B	54.84	24.24%	1.33%	0.98%	-7.51%
IR	69 Neutral	$34.29B	64.38	5.35%	0.10%	4.20%	-34.47%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
OTIS	62 Neutral	$35.30B	26.69	―	1.88%	0.73%	-15.57%