WEC Energy Group Inc (WEC) Financial Statements

Analyzing WEC Energy Group through the GoodMoat Quality Indicators reveals a profile typical of regulated utilities, with both strengths and weaknesses. On the positive side, the company demonstrates solid operating profitability with a 22.9% operating margin and consistent revenue growth of 11.1% YoY. Its ROE of 11.4%, while not meeting the framework's high threshold of >15-20%, is reasonable for the sector. However, several metrics are unfavourable. Most notably, the free cash flow yield is negative at -2.8%, indicating the company is not generating surplus cash after capital expenditures, which fails the framework's test for positive, growing FCF. The balance sheet is heavily leveraged with a Debt/Equity ratio of 1.64, far above the preferred level of low/zero debt (Debt/EBITDA < 1.0x). This high debt is standard for utilities funding large infrastructure projects but limits financial flexibility. The Growth Assessment shows the 11.1% revenue growth is healthy, but it is likely driven by regulated rate base increases rather than durable moat advantages. For a value investor focused on high returns on capital, strong cash generation, and clean balance sheets, WEC's profile presents several cautionary points, particularly its cash flow and leverage. Analysis based on data as of 2024-05-15.