WEGZY - WEG: Difficulty In Maintaining Strong Growth Valuation Appears Stretched

2024-04-03 08:53:25 ET

Summary

• WEG trades with a large premium of 31% in its valuation compared to its competitors, this is due to the quality of its managers who created a unique business model.
• However, in 2023 the company had difficulty maintaining the strong earnings growth embedded in its valuation, this is due to restrictive monetary policies around the world.
• With difficult prospects for capital goods businesses around the world over the next few years, the company may undergo multiple repricing by the market.

Investment Thesis

I recommend holding WEG (WEGZY) shares. The company has excellent managers, who over time have made WEG achieve results consistently above market expectations, despite operating in a cyclical sector. The company has a premium of 31% in its valuation compared to the sector average, this is due to the excellent results it has achieved....

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