WEG’s Stellar Second Quarter Sends Stocks Soaring, Market Value Up by $18 Billion
On July 31, 2024, WEG’s stock, WEGE3, soared on B3 exchange nearly 10%, boosting its market value by $18 billion.
At 12:20 PM in Brasília, the stock hit a high of $50.34, up from $49.83. This surge came after a stellar second quarter, showcasing WEG as a key player in the electric motor industry.
WEG’s second quarter results surpassed expectations with a net profit of $1.44 billion, a 5.4% year-over-year increase.
Even more impressive, the company’s EBITDA stood at $2.12 billion, marking a 15.7% growth from last year and a 19.8% rise from the first quarter.
These figures not only beat the previous year’s results but also exceeded market forecasts by 10%. Revenue figures were equally strong, with operational net revenue reaching $9.27 billion.
This represents a 13.5% increase over the same period last year and a 19.8% rise from the previous quarter.
Analysts from XP Investments pointed out that profits were 6% higher than expected. They noted the surprising improvement in EBITDA margin due to robust demand, a favorable product mix, and positive impacts from currency depreciation.
JPMorgan highlighted WEG’s accelerated revenue growth, the highest since the second quarter of 2023 at over 13%.
This growth was partly driven by the integration of Regal, which, despite pressuring margins, achieved a record EBITDA margin of 22.9%.
Goldman Sachs also recognized the strong margins, planning further analysis in an upcoming conference call.
However, the effective tax rate increased to 22.7%, the highest since 2014. Also, growth in Generation, Transmission, and Distribution (GTD) abroad was the weakest in seven quarters, at only 16% year-on-year.
Despite these hurdles, JPMorgan kept an overweight rating on WEG’s shares. Goldman Sachs and Morgan Stanley continued their sell recommendations.
Bradesco BBI raised their target price from $43 to $50, reflecting cautious optimism.
WEG’s Stellar Second Quarter Sends Stocks Soaring, Market Value Up by $18 Billion
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