WEG S.A. (WEGE3.SA) Stock Analysis & Winston Score

WEG S.A. is a Brazilian industrial company that makes electric motors, generators, transformers, and energy equipment. Its products power factories, wind turbines, solar installations, and large machines used in industries like mining, oil and gas, and agriculture. WEG is one of the largest electric motor manufacturers in the world and is headquartered in Jaraguá do Sul, Brazil.

The company sells its equipment directly to industrial customers and through distributors, earning revenue from hardware sales and, increasingly, from complete energy systems and automation solutions. WEG operates in over 40 countries, with manufacturing plants across the Americas, Europe, Asia, and Africa, giving it a broad global footprint. Its main competitive advantage is vertical integration — it makes most of its own components in-house, which keeps costs low and quality consistent. The key growth driver is rising global demand for energy efficiency and renewable energy infrastructure, though currency fluctuations and raw material costs remain ongoing risks.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

-6.1% YoY

YoY Growth Rate

Revenue declining

EPS Growth

-5.4% YoY

YoY Growth Rate

Earnings declining

R&D Spend

$1.4B/ year

↑ Rising (+30% vs prior year)

3.4% of revenue

In line with sector average (4%)

R&D investment increasing — building for the future

Insider Activity

65.2%ownership

Insiders own a meaningful stake in the company

Cash Position

Cash flow positive

$7.5B cash & investments

Quarterly Free Cash Flow

→ Burn rate stable

Company generates more cash than it spends — no dilution risk from fundraising

Revenue declining

WEG S.A.'s revenue is actually shrinking. In a growth stock, that removes the core investment thesis. The low Winston Score here may be warranted — unless there's a turnaround story.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Share count broadly stable

−0.0% over 4y

The share count has stayed roughly flat over this period — little dilution or buyback activity.

Diluted shares outstanding: 4.20B (2021) → 4.20B (2025)

Score breakdown

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Quality

Gross Margin

29.5%

Modest — 29.5% gross margin

Operating Margin

16.9%

Healthy — 16.9% operating margin

ROCE

7.3%

Weak — 7.3% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY

+0.4%

Nearly flat sales (0.4% YoY)

EPS YoY

+0.7%

Flat earnings

Single-digit earnings growth — steady but not exciting.

EPS Consistency

4/8 quarters

Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion

114%

Turns 114% of profit into real cash

FCF Margin

11.3%

Modest free cash flow (11.3%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity

0.24

Conservative — low debt load (0.24)

Interest Cover

8.77x

Comfortably covers interest (8.8x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

29.1x

Growth-priced — P/E 29.1

P/E above the market average. People are paying up for expected growth.

P/E vs Forward

+9.1

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (29.1 → 20.0)

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Dividends

Dividend Yield

2.16%

Moderate income — 2.16% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth

+80.2%

Dividend growing fast (80.2% YoY)

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