WEGZY — WEG S.A.
$8.61
Target: $10.30 (+19.6%)
P/E Ratio
28.8
P/E Forward
26.0
Dividend
4.5%
Market Cap
$32.4B
EPS
$0.27
Consensus
Hold
What they do
WEG S.A. is a Brazilian industrial company founded in 1961 by Werner Ricardo Voigt + Eggon João da Silva + Geraldo Werninghaus (the initials of their surnames form 'WEG'). Headquartered in Jaraguá do Sul, Santa Catarina. Today it is the #1 electric motor maker in the Americas and top 5 worldwide, competing with ABB (Switzerland), Siemens (Germany), Nidec (Japan) and Toshiba.
4 business segments:
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- Industrial Electro-Electronic Equipment (~52% of revenue)** — low- and high-voltage electric motors (more than 21 million units per year), drives, controls, soft-starters, industrial automation. Typical customer: any factory in the world running conveyor belts, pumps or compressors.
**
- GTD (Generation, Transmission & Distribution) ~36% of revenue** — generators for hydropower plants, onshore wind turbines (WEG is #1 in Brazil), high-voltage transformers, substations. This is the segment accelerating fastest because of AI data center electrification demand.
**
- Commercial & Appliance Motors** — small motors for household appliances + HVAC.
**
- Paints & Coatings + Other** — residual.
Revenue geography: Brazil ~38% / International ~62% (USA, Mexico, Europe, China, India). Sells to 135+ countries, factories in 15. The acquisition of Regal Rexnord motors (closed H1 2024, ~$400M, added ~$541M in revenue) expanded capacity in the USA, Mexico, China, India and Italy.
Leadership:
- CEO: Alberto Yoshikazu Kuba since April 2024 (replaced Harry Schmelzer Jr., who led the company for 16 years). 21 years with WEG, electrical engineer, 44 years old.
- Founding families remain controlling shareholders.
IPO: B3 in 1971. ADR WEGZY since Sep 2010 (depositary JP Morgan).
Why we like it
WEGZY at $8.61 means buying Latin America's #1 electric motor maker — and a critical manufacturer of transformers and turbines — right when global demand for electrical equipment is bottlenecked by AI data center electrification. Specific reasons:
- Structural AI/data center tailwind: the high-voltage transformers that hyperscalers need (Microsoft, Amazon, Meta, Google — each spending $80B+ per year on infrastructure) now have delivery wait times that went from 24-30 months pre-2020 to 5 years in 2026. WEG is one of a handful of manufacturers in the world that makes them at scale.
- Elite operating profit margin ~22% sustained — ABB and Siemens trade at margins similar to WEG but at 2x the valuation multiple, while WEG has a cost advantage from vertical integration in Brazil. Return on invested capital FY2025 ~32%.
- Solid signed-order pipeline in GTD — management flagged 'solid order intake' in Q1 2026, especially for long-cycle transmission & distribution.
- Record capex 2026 of R$3.6B funds expansion in Brazil, Mexico, Colombia and China — Betim plant online H2 2026.
- Dividend + interest-on-capital yield ~4.5% + 55 years of payment history.
- Average analyst price target R$51.60 = ~$10.30 ADR = +19.6% upside from $8.61. The buy case now is contrarian — Q1 2026 was weak (revenue -6.1% year over year, the first decline in years due to Brazil's centralized solar pipeline collapse) and the market punished the stock -20% off its 52-week high. This is an attractive entry into a company that has historically compounded returns ~25% annually in BRL since its 1971 IPO.
Key Risk
Risks:
- Q1 2026 was the first quarter with negative revenue in years (-6.1% year over year to R$9.47B) because of Brazil's centralized solar pipeline collapse — domestic Brazil -19.5%. If solar doesn't recover in H2 2026, the growth story deteriorates.
- Operating profit margin compressed -3.2 percentage points year over year to 22.2% in Q1 — still an elite level but the trend is concerning.
- Brazilian real strengthening in 2025-2026 compresses translation of the 62% of revenue that is international (Q1 USD +16% but in Brazilian reais only +4.5% due to exchange rates). If the real keeps strengthening, reported numbers will continue to lag.
- Price vs. profit ratio of 28.8x (trailing 12 months) with declining earnings is vulnerable — if Q2 also misses, multiple compression is likely.
- Cyclical exposure to industrial investment — if Chinese electrification spending slows or US data center buildout pauses, the GTD order pipeline flattens.
- Copper, steel and aluminum are the main inputs — commodity price spikes pressure margins.
- Regal Rexnord integration still in progress — culture clash and restructuring drag are possible.
- Limited ADR liquidity — WEGZY trades on OTC markets with low volume. For larger positions, WEGE3.SA direct on B3 is a better option.
This is educational and informational content, not financial advice. Always consult a qualified financial advisor before making investment decisions.
Vectorial Data picked WEGZY on 2026-05-27 at $8.61.
Full Research
WEG S.A. (WEGZY / WEGE3) — Research Completo
Precio: $8.61 ADR | P/E TTM: 28.78 | Div Yield: ~4.5% | Market Cap: $32.4B | EPS: $0.27
¿Qué es WEG?
Empresa industrial brasileña fundada en 1961 por Werner Ricardo Voigt + Eggon João da Silva + Geraldo Werninghaus en Jaraguá do Sul, Santa Catarina (de ahí el nombre 'WEG'). Hoy es el fabricante de motores eléctricos #1 de las Américas y top 5 mundial.
~49,300 empleados. Fábricas en 15 países. Vende a 135+ países. IPO B3 1971. ADR WEGZY (1:1) en OTC desde sep 2010.
4 Segmentos (FY2025)
| Segmento | % Revenue | Productos |
|---|---|---|
| Industrial / Motors + Automation | ~52% | Motores baja/alta tensión, drives, controles, soft-starters |
| GTD (Gen, Trans, Distribution) | ~36% | Turbinas eólicas, generadores, transformadores, subestaciones |
| Commercial & Appliance Motors | residual | Motores chicos para HVAC + línea blanca |
| Paints & Coatings | residual | Pinturas industriales |
Q1 2026 (reportado abril 2026)
- Net revenue: R$9.47B (-6.1% YoY) — primer negativo en años
- EBITDA: R$2.10B / margin 22.2% (-3.2pp YoY)
- Net income: R$1.46B (-5.7% YoY, ~7% miss vs Bloomberg consenso)
- ROIC: 33.1% (todavía elite)
- Brasil doméstico: -19.5% (colapso solar pipeline)
- Internacional (USD): +16.1%, (BRL): +4.5%
FY2025
- Net revenue: R$40.8B (+7.4% YoY)
- EBITDA margin: ~22%
- Capex: R$2.1B (récord)
- ROIC: ~32%
Capex 2026 — R$3.6B (récord)
Foco T&D + nuevas plantas:
- Brasil
- México
- Colombia
- China
- Plant Betim (Brasil) online mid-2026
AI / Data Center Exposure
Los transformadores de alta tensión que necesitan los hyperscalers son cuello-de-botella global:
- Pre-2020: 24-30 meses lead time
- 2026: 5 años lead time
WEG es uno de los pocos fabricantes a escala mundial. T&D segment es el growth engine 2026-2030.
M&A Reciente
- Regal Rexnord motors business (H1 2024, ~$400M): añadió +$541M revenue, capacidad en US, México, China, India, Italia, Países Bajos, Canadá — 2,800 empleados
- Volt Electric Motor (Turquía, 2024): expansión Europa/MEA
Liderazgo
- CEO: Alberto Yoshikazu Kuba (desde abril 2024)
- Familias fundadoras: Voigt + da Silva + Werninghaus siguen como controladores
- Reemplazó a Harry Schmelzer Jr. (16 años CEO)
- 21 años en WEG, ingeniero eléctrico, 44 años
Dividendo + IOC (Interest on Capital)
- R$2.15/acción/año trailing (combinado dividendo + IOC)
- Yield trailing ~4.78%
- 15% withholding tax brasileño sobre IOC
- Política: ~50-60% payout sostenible
Wind Turbines — Brasil leadership
- #1 en Brasil en instalaciones de turbinas onshore
- Joint launch con Petrobras + Statkraft: turbina 7 MW más potente onshore de Brasil (Bahia, Sep 2025)
- Exporta generadores gearless a Chile, Argentina, Colombia
Anchor Fact
WEG fabrica más de 21 millones de motores eléctricos al año desde Jaraguá do Sul. Hoy, los transformadores gigantes que necesitan los data centers de AI tardan 5 años en llegar (antes de 2022 era 2 años). WEG es uno de los pocos fabricantes en el mundo que los hace a escala.
Top 3 Risks
- Q1 2026 -6.1% revenue — primer negativo en años; si Q2 confirma → multiple compression
- BRL appreciation comprime reported numbers
- Cyclical capex industrial — slowdown China o USA data center pause hit GTD
Analyst Consensus
- Rating: Hold/Neutral (6 Buy / 5 Hold / 3 Sell)
- Target promedio: R$51.60 (rango R$38.38-R$73.50)
- Upside ADR desde $8.61: ~+19.6%
Tesis en una línea
Comprar el fabricante de motores eléctricos #1 de Latinoamérica y proveedor crítico de transformadores AI-data-center justo cuando Q1 2026 fue débil (colapso solar Brasil) y el mercado castigó la acción -20% del max 52 semanas. Yield 4.5% + Aristocrat-style track record desde 1971 + estructural AI tailwind + M&A pipeline activo (Regal Rexnord, Volt Turquía) + capex R$3.6B 2026.
Research fecha: 27 May 2026 | Próxima revisión: Nov 2026
Esto no es asesoría financiera.
This is not financial advice. Consult a certified financial advisor.
The author may hold positions in the securities discussed.
Past performance does not guarantee future results.