Last Update 17 Nov 25
Fair value Increased 0.48%WEC: Operational Execution And Regulatory Support Will Shape Near-Term Stock Trends
WEC Energy Group's average analyst price target has been modestly increased by approximately $0.59 to $122.62 per share. Analysts cite improving long-term growth prospects and consistent operational execution, which support a more constructive outlook.
Analyst Commentary
Analyst sentiment on WEC Energy Group continues to reflect a balance between the company's proven track record and the challenges inherent to its sector. Recent price target increases and rating adjustments highlight both strengths and areas for concern as WEC navigates evolving growth demands and regulatory environments.
Bullish Takeaways- Bullish analysts have raised price targets in response to WEC's consistent operational execution and management's ability to meet or exceed guidance, contributing to a premium valuation relative to peers.
- Long-term growth prospects remain robust, with expectations that WEC may increase its EPS growth rate target, potentially pointing toward the high end of its outlook range.
- WEC benefits from a constructive regulatory environment in Wisconsin, which has historically supported steady earnings and offered solid growth potential for utilities.
- The company's positioning within a sector experiencing accelerated electricity demand, driven by factors like data center growth, provides a favorable backdrop for sustained expansion and value creation.
- Bearish analysts note that expectations for growth are now very high, with much of the anticipated earnings benefit from new capital investments projected to accrue toward the end of the current five-year plan.
- There are concerns that the gap between WEC and higher-growth utility peers is narrowing, which could pressure future valuation premiums.
- Although the market backdrop is favorable, regulated utility stocks may continue to face near-term investor skepticism, and WEC is not immune to fluctuating sentiment.
- Some analysts have adopted a more neutral stance, believing that while WEC is well managed, potential upside could be capped in the coming years compared to other options with higher growth trajectories.
What's in the News
- WEC Energy Group has filed a follow-on equity offering for $3 billion in common stock through an at-the-market offering (Key Developments).
- The company reaffirmed its earnings guidance for 2025. It is projecting earnings of $5.17 to $5.27 per share, assuming normal weather for the rest of the year (Key Developments).
Valuation Changes
- Fair Value has risen slightly, from $122.03 to $122.62 per share.
- Discount Rate has increased moderately, moving from 6.78% to 6.96%.
- Revenue Growth estimate has edged higher, going from 5.35% to 5.45%.
- Net Profit Margin has declined marginally, decreasing from 19.58% to 19.54%.
- Future P/E has dipped marginally, from 23.99x to 23.94x.
Key Takeaways
- Surging power demand and grid modernization efforts position WEC for sustained top-line and earnings growth, supported by infrastructure investments and a favorable regulatory environment.
- Accelerated investment in renewables and battery storage secures long-term benefits from the energy transition and strengthens regulated earnings as decarbonization intensifies.
- Heavy capital spending, regulatory uncertainties, fuel mix issues, and rising costs pose risks to profitability, revenue growth, and long-term asset values amidst evolving market dynamics.
Catalysts
About WEC Energy Group- Through its subsidiaries, provides regulated natural gas and electricity, and renewable and nonregulated renewable energy services in the United States.
- The rapid expansion of data centers (not yet fully included in current forecasts) and continued investments by large customers like Microsoft and Vantage are set to meaningfully increase regional power demand, which should drive above-average revenue and rate base growth for WEC over time.
- Substantial grid and infrastructure modernization, including $28 billion in capex over five years, positions WEC to capitalize on federal and state infrastructure priorities and meet the needs of an aging U.S. power system; this supports predictable earnings growth and rate recovery.
- WEC is accelerating investment in renewables and battery storage to secure long-term energy transition benefits and eligibility for tax credits, enhancing utility margins and providing additional sources of regulated earnings as decarbonization efforts intensify nationwide.
- Strengthened regional economic development along the I-94 corridor, low unemployment, and robust housing and commercial growth suggest continued organic load and customer expansion, likely resulting in highly visible top-line growth for the company.
- Constructive regulatory outcomes-like the pending 20-year large load tariff, which provides fixed ROEs and cost protection-enhance earnings stability and net margin resilience, particularly as electrification and grid demand accelerate through the end of the decade.
WEC Energy Group Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming WEC Energy Group's revenue will grow by 5.1% annually over the next 3 years.
- Analysts assume that profit margins will increase from 17.9% today to 19.4% in 3 years time.
- Analysts expect earnings to reach $2.1 billion (and earnings per share of $6.22) by about September 2028, up from $1.7 billion today. The analysts are largely in agreement about this estimate.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.5x on those 2028 earnings, up from 20.8x today. This future PE is greater than the current PE for the US Integrated Utilities industry at 19.7x.
- Analysts expect the number of shares outstanding to grow by 1.74% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.
WEC Energy Group Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- The company's aggressive $28 billion capital investment plan through 2029, supported in part by $2.7–$3.2 billion in new equity issuance, exposes WEC to higher financing costs and share dilution risks, especially if long-term interest rates rise or equity markets weaken, potentially reducing net margins and earnings per share growth.
- Regulatory and policy uncertainties-such as pending approval of the large customer tariff, evolving treasury guidance on renewable tax credits, and future EPA rules-may hinder WEC's ability to recover costs or undermine expected returns on infrastructure projects, directly affecting profitability and long-term revenue visibility.
- WEC's ongoing reliance on coal and natural gas generation, including recent extensions to coal plant lifespans, risks misalignment with accelerating decarbonization trends and stricter emission policies, increasing stranded asset risks and future compliance costs that could compress earnings and asset values over time.
- Elevated operations and maintenance (O&M) expenses (expected to rise 8–10% year-over-year), exposure to storm-related damages (as seen with Texas solar facilities), and required replacement of aging gas infrastructure (e.g., 1,100 miles of pipe), all increase the company's cost base, pressuring net margins if not fully recoverable through rates.
- Uncertainties in the timing and scale of major anticipated demand drivers (such as Vantage and Microsoft data centers)-including project ramp-up, construction delays, or customer postponements-could lead to lower-than-expected volume growth, resulting in softer top-line revenue and diminished earnings leverage.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $109.731 for WEC Energy Group based on their expectations of its future earnings growth, profit margins and other risk factors.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $10.8 billion, earnings will come to $2.1 billion, and it would be trading on a PE ratio of 21.5x, assuming you use a discount rate of 6.8%.
- Given the current share price of $107.56, the analyst price target of $109.73 is 2.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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