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Last update on 2024-06-06

WEC Energy Group (WEC) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

WEC Energy Group (WEC) Piotroski F-Score Analysis for 2023 with a final score of 5/9. Comprehensive financial evaluation including profitability, liquidity, and leverage.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running WEC Energy Group (WEC) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
0
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
0

We ran an analysis on WEC Energy Group (WEC) using the Piotroski F-Score, which assesses a company's financial health. WEC scored 5 out of 9. The analysis looked at WEC's profitability, liquidity, and operating efficiency. WEC demonstrated positive net income and strong operating cash flow. However, their ROA decreased and their leverage and current ratio did not show improvement. Gross Margin was increasing, but Asset Turnover continued to decline. Overall, the financial performance of WEC is mixed.

Insights for Value Investors Seeking Stable Income

WEC Energy Group (WEC) shows some strong financial indicators, like positive net income and operating cash flow, but also some worrying signs, such as decreasing ROA and asset turnover. The company’s liquidity and leverage ratios could be better. Given the mixed results of this analysis, it would be prudent to further investigate other aspects of the company before making an investment decision. While the company is not performing poorly, it isn’t currently standing out as a highly attractive investment based on the Piotroski F-Score analysis.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of WEC Energy Group (WEC)

Company has a positive net income?

Net income assesses a company's profitability over a specific period, typically annually, revealing whether it is operating at a profit or loss.

Historical Net Income of WEC Energy Group (WEC)

For WEC Energy Group (WEC), the net income in 2023 amounts to $1,332,900,000. This is indeed a positive figure. Over the past 20 years, WEC has exhibited a steady increase in net income, starting from $244,300,000 in 2003 and consistently growing with minor fluctuations. This steady growth trend is a strong indicator of the company's robust profitability and reliable financial performance. Given the criteria of the Piotroski score, WEC earns 1 point for having a positive net income, signaling good health in terms of earnings.

Company has a positive cash flow?

A positive Cash Flow from Operations (CFO) indicates that a company is generating enough revenue from its core activities to maintain and grow operations, which is pivotal for long-term sustainability.

Historical Operating Cash Flow of WEC Energy Group (WEC)

For 2023, WEC Energy Group (WEC) reported a Cash Flow from Operations (CFO) of $3,018,400,000. This value is a positive figure and hence adds 1 point to the Piotroski F-Score. Analyzing the chart data over the last 20 years, it's evident that WEC has consistently reported positive CFO, which showcases a stable and growing core business performance. For instance, the CFO improved from $623,900,000 in 2003 to $3,018,400,000 in 2023. Such a robust trend in cash flows underscores strong operational efficiency and demonstrates the management's ability to generate consistent earnings from its primary business activities, which is crucial for investor confidence and long-term viability.

Return on Assets (ROA) are growing?

This criterion measures the annual change in a company's Return on Assets (ROA), an indicator of how efficiently a company is using its assets to generate earnings. A positive change signals potential operational improvement.

Historical change in Return on Assets (ROA) of WEC Energy Group (WEC)

In 2023, WEC Energy Group's ROA decreased to 0.0311 from 0.0349 in 2022, representing a decline. An ROA of 0.0311 is notably lower when compared to the industry median of 0.4109 for the same year, indicating underperformance. Considering the 20-year trend, while WEC's operating cash flow has generally increased, the decrease in ROA this year is a negative signal. Therefore, for this Piotroski analysis criterion, WEC receives 0 points, indicating a declining efficiency in asset utilization for earnings generation.

Operating Cashflow are higher than Netincome?

Determining if the Operating Cash Flow (OCF) is higher than Net Income is crucial as it indicates the company's ability to generate sufficient cash to sustain and grow operations independent of accounting adjustments.

Historical accruals of WEC Energy Group (WEC)

For WEC Energy Group (WEC), the Operating Cash Flow in 2023 stands at $3,018,400,000, significantly higher than the Net Income of $1,332,900,000. This robust OCF compared to net income is an encouraging sign of financial health, as it suggests the company’s revenues are being effectively translated into actual cash. Over the past 20 years, the OCF has generally hovered around 1 to 2 billion dollars, with a noticeable uptick in 2023. This upward trend in OCF further emphasizes WEC's improving efficiency and operational cash-generating power. Therefore, this analysis adds 1 point to the Piotroski score.

Liquidity of WEC Energy Group (WEC)

Leverage is declining?

Changes in leverage measures the company’s long-term financial obligations relative to its equity. Lower leverage suggests a healthy reduction in debt levels.

Historical leverage of WEC Energy Group (WEC)

The leverage ratio of WEC Energy Group has slightly increased from 0.3527 in 2022 to 0.353 in 2023. Given the negligible increase of 0.0003, the leverage score would receive 0 points according to Piotroski's criteria. Historically, WEC has shown gradual fluctuations in leverage, peaking at 0.3565 in 2003 and reaching its lowest at 0.2707 in 2007. Therefore, in 2023, the company sees a mild uptick in leverage compared to 2022, reflecting a potential slight elevation in debt levels which warrants close monitoring.

Current Ratio is growing?

The Current Ratio evaluates a company's ability to meet short-term liabilities with short-term assets. A higher number indicates better liquidity.

Historical Current Ratio of WEC Energy Group (WEC)

For WEC Energy Group (WEC), the Current Ratio has decreased from 0.6913 in 2022 to 0.5466 in 2023. This reflects a decline in liquidity indicating the company has fewer assets to meet its short-term obligations. Notably, the industry median for the current ratio in 2023 is 0.7878, showing that WEC's liquidity position is also trailing behind the industry standard. Over the last 20 years, WEC's lowest current ratio was 0.5022 in 2020, whereas the highest was 1.1855 in 2004. The downward trend year-over-year demonstrates that WEC needs to strategize to improve its liquidity status. Thus, the Current Ratio score for 2023 is set to 0, reflecting this downturn.

Number of shares not diluted?

Shares outstanding refer to the total number of a company’s shares of stock that are owned by shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Historical outstanding shares of WEC Energy Group (WEC)

In 2022, WEC Energy Group had 315,400,000 outstanding shares, which remained constant in 2023. Therefore, the number of outstanding shares has neither increased nor decreased. According to Piotroski's F-score criterion, if the number of outstanding shares decreases, it would indicate a potential buyback or a positive signal reducing equity dilution, thereby adding 1 point. In this case, with no change year-over-year, the score remains 0 as the outstanding shares did not decrease.

Operating of WEC Energy Group (WEC)

Cross Margin is growing?

Gross Margin measures the percentage of revenue remaining after deducting the cost of goods sold. It's crucial for assessing profitability.

Historical gross margin of WEC Energy Group (WEC)

The Gross Margin for WEC Energy Group in 2023 was 0.405 compared to 0.3439 in 2022, indicating an increase. This is favorable and earns WEC a point. Moreover, in 2023, WEC's Gross Margin surpasses the industry median of 0.4109, reinforcing its strong performance in cost management.

Asset Turnover Ratio is growing?

Asset Turnover is defined as the ratio of a company's sales to its assets. It provides insight into how efficiently a company utilizes its assets to generate revenue.

Historical asset turnover ratio of WEC Energy Group (WEC)

The Asset Turnover for WEC Energy Group (WEC) has decreased from 0.2374 in 2022 to 0.2073 in 2023. A decreasing Asset Turnover can indicate that the company is employing its assets less efficiently than in the previous year, which is not a favorable trend. Over the last 20 years, we observe a consistent decline in WEC's Asset Turnover from 0.4409 in 2003 to 0.2073 in 2023, showcasing a long-term downward trend. This persistent trend might suggest systemic issues in asset utilization within the company. Consequently, in the Piotroski Analysis score, this criterion does not earn a point.


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