WEC - WEC Energy Group's Large Project Pipeline Keeps Growth Flowing

2024-05-22 04:36:39 ET

Summary

• WEC Energy Group has a strong track record of growth and plans to invest over $20 billion in fresh investments, fueling significant EPS growth for the next 5 years.
• Wisconsin's increasing demand for energy, including Microsoft's $3.3 billion investment in a datacenter campus, provides opportunities for WEC's growth in the state.
• WEC's cash flow greatly exceeds its earnings, leaving ample capital available for investment, and the company anticipates minimal equity issuance.

The Buy Thesis

WEC Energy Group ( WEC ) has a strong track record of growth and a clear pathway to continue that growth. Energy demand ramping up in WEC’s markets as well as a need for revitalized energy infrastructure has paved the way for greater than $20B of fresh investments from WEC. These come at an expected ROE of 9.8%-10% which can fuel significant EPS growth for the next 5 years.

This growth pathway is right in line with what WEC has produced for the last 2 decades, but in the past, investors have had to pay a premium to get the reliable growth. Over the last 5 years, WEC’s share price has not kept up with its dividend, its GAAP EPS or its cash flows such that WEC can now be purchased at an unusually high dividend yield and unusually low valuation multiples....

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