WEC Energy Group, Inc.

Analysis of WEC Energy Group (WEC)

Technical Analysis WEC has exhibited steady, defensive performance with moderate gains and remarkably low volatility. The stock trades near the upper end of its 52-week range but maintains a shallow maximum drawdown, indicating resilience and contained downside risk relative to the broader market. Its low beta reinforces its stability, making it suitable for risk-averse investors.

Fundamentals While WEC demonstrated sequential revenue growth, profitability margins have compressed amid cost pressures. The company carries a moderate debt load but faces liquidity constraints with weak current and quick ratios. Operational returns remain subdued, reflecting the capital-intensive nature of the utilities sector, though cash flows appear sufficient to support ongoing operations.

Valuation WEC trades at a premium with elevated valuation multiples such as P/E and EV/EBITDA, signaling high market expectations. Without clear peer benchmarks, it is uncertain whether this premium is justified relative to sector norms. Investors should weigh its defensive attributes against its rich valuation.

Risk Assessment WEC presents low volatility risk and limited bearish sentiment, aligning with its defensive profile. Typical utility-sector risks—such as regulatory changes and interest rate fluctuations—persist but are mitigated by the company’s established market position and stable revenue model.

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Investment Recommendation

Consider Buy for Defensive Portfolios WEC offers stable returns and lower volatility, appealing for conservative investors seeking steady income and capital preservation. Despite valuation concerns, its resilient business model and regulated cash flows provide a buffer against market downturns. Investors should monitor margin trends and regulatory developments but may find value in its defensive characteristics over the long term.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis provided, here is a 12-month outlook for WEC Energy Group (WEC):

The 12-month outlook for WEC is stable, characterized by modest growth driven by its predictable, regulated utility business model. Key positive catalysts include its defensive nature, which should provide resilience during market volatility, and its ability to generate stable cash flows to support its dividend. Potential risks center on its premium valuation, which leaves little room for multiple expansion, and ongoing pressure on profit margins from rising operational costs. Given the lack of a specific analyst target, a reasonable expectation is for the stock to deliver total returns largely in line with its dividend yield, with a price target range closely anchored to the current price, suggesting minimal capital appreciation.

Wall Street Consensus

Most Wall Street analysts are optimistic about WEC Energy Group, Inc.'s 12-month outlook, with consensus target around $114.22, indicating expected upside potential.

Overall, WEC has investment potential but also faces challenges. Here are key factors to weigh before investing.

WEC has demonstrated steady, defensive performance with moderate gains and low volatility characteristics. The stock has shown resilience with positive returns across timeframes while maintaining significantly lower risk than the broader market.

Over the short term, WEC has posted solid gains with 4.73% appreciation over one month and 2.22% over three months, slightly outperforming the market by 0.37%. The stock's low beta of 0.583 confirms its defensive nature, exhibiting less volatility than the overall market during this period.

Currently trading at $114.22, WEC sits in the upper quartile of its 52-week range, approximately 78% between its low of $100.61 and high of $118.19. While not at extreme levels, the stock approaches the higher end of its range after recent strength, though its modest maximum drawdown of -11.93% over the past year suggests contained downside risk.

WEC's Q4 2025 revenue of $2.54 billion reflects sequential growth from Q3's $2.10 billion, though profitability metrics show pressure with gross margin declining to 48.8% from 71.1% last quarter. The net profit margin remains modest at 12.5%, indicating stable but compressed earnings despite revenue expansion. Operating margins of 23.0% suggest reasonable operational control despite cost structure challenges.

The company maintains a moderate debt profile with a debt-to-equity ratio of 1.64, though liquidity concerns are evident with weak current and quick ratios of 0.47 and 0.34 respectively. Cash flow coverage ratios appear strained, particularly the negative free cash flow per share of -$2.78, indicating potential capital allocation challenges relative to operating needs.

Operational efficiency metrics show room for improvement with ROE at 2.3% and asset turnover of just 0.05, reflecting suboptimal utilization of the asset base. The fixed asset turnover of 0.07 suggests capital-intensive operations typical of utilities, while inventory turnover of 1.6 indicates adequate but not exceptional working capital management.

Valuation Level: WEC's TTM PE of 21.88 and a higher forward PE of 27.07 suggest the market is pricing in higher future earnings, but at a premium. The exceptionally high EV/EBITDA of 59.01 and a PEG ratio well above 1.0 indicate the stock appears significantly overvalued based on both current earnings power and expected growth.

Peer Comparison: A conclusive comparison is not possible due to the unavailability of industry average data. Without benchmark metrics for the utilities sector, it is challenging to determine if WEC's valuation multiples are in line with or deviate from sector norms. Analysis would be significantly enhanced with access to peer group averages.

Volatility Risk: WEC exhibits notably low volatility risk, characterized by a Beta of 0.583 indicating the stock is approximately 42% less volatile than the broader market. This is further supported by a modest one-year maximum drawdown of -11.93%, reflecting a historically stable price trajectory with relatively shallow declines during downturns.

Other Risks: The absence of notable short interest suggests a lack of significant negative sentiment from bearish investors. As a regulated utility, WEC faces inherent risks such as changes in interest rates, regulatory decisions, and operational challenges, though its liquidity is typically robust due to its large market capitalization.