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    WEGE3   BRWEGEACNOR0

WEG S.A.

(WEGE3)
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Motor maker Weg emerges as battered Brazil stock market's champion

04/17/2020 | 12:46pm EDT
FILE PHOTO: People look at an electronic board showing the graph of fluctuations of market indices at the floor of Brazil's BM&F Bovespa Stock Market in downtown Sao Paulo

In a bleak year that has seen Brazil's Bovespa <.BVSP> slump to the worst performance of any major world stock market amid a coronavirus-linked retreat from risk, electric motor maker Weg SA has been the index's improbable champion.

Traded on the Brazilian stock exchange for nearly a half century and part of the benchmark index as of 2016, Weg shares have risen over 10% so far in 2020, recovering from steep losses in March. The Bovespa has lost a third of its value in the same period and nearly half in dollar terms.

Weg, which makes everything from wind turbines to automotive paint, is one of just two Bovespa components to eke out gains this year. The runner up is e-commerce firm B2W Companhia Digital, whose shares are up 2.91% amid a boom in internet orders during the crisis.

Weg's resilience in midst of the coronavirus pandemic and ensuing economic downturn may reflect its ample exposure to countries beyond Brazil's commodities-linked economy, including China.

"It deserves it," said Werner Roger, founding partner at asset management firm Trígono Capital. "Weg is a leading company and is present in several countries, with more than half of its revenue coming from abroad," he said, citing growth that has been sustainable organically and also lifted by acquisitions, as well as good governance.

In 2019, Weg's net income rose 21% to 1.6 billion reais ($306.75 million) as revenue and margins improved in all markets.

The electric motor maker, which had a net cash position of 1.28 billion reais in December, is expected to report its first-quarter results on April 29.

Despite its strong cash position and a limited debt load, analyst Lucas Marquiori at investment bank BTG Pactual said Weg's operating margin could be impacted by global output stoppages caused by the pandemic.

The company temporarily cut its factory workforce in the southern Brazilian state of Santa Catarina in March while noting that it had kept its four Chinese factories running since Feb. 11.

But analysts Victor Beyruti Guglielmi and Alejandro Ortiz, at brokerage Guide Investimentos, noted that Weg decided to not cut capital expenditures even during the crisis, which he said could give it a competitive advantage compared to its local peers.

A weaker Brazilian currency this year should also benefit Weg since much of its business is export-based, according to market participants.

By Paula Laier


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AMP LIMITED -0.81% 1.225 End-of-day quote.-21.47%
B2W - COMPANHIA DIGITAL -1.65% 71.08 End-of-day quote.-5.99%
EURO / US DOLLAR (EUR/USD) -0.74% 1.1906 Delayed Quote.-1.79%
IBOVESPA -0.93% 128057.22 Delayed Quote.8.61%
WEG S.A. -1.78% 34.83 End-of-day quote.-8.03%
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Financials
Sales 2021 20 471 M 4 072 M 4 072 M
Net income 2021 3 032 M 603 M 603 M
Net cash 2021 2 713 M 540 M 540 M
P/E ratio 2021 50,8x
Yield 2021 1,03%
Capitalization 146 B 29 114 M 29 070 M
EV / Sales 2021 7,01x
EV / Sales 2022 6,09x
Nbr of Employees -
Free-Float 35,1%
Chart WEG S.A.
Duration : Period :
WEG S.A. Technical Analysis Chart | WEGE3 | BRWEGEACNOR0 | MarketScreener
Technical analysis trends WEG S.A.
Short TermMid-TermLong Term
TrendsBullishBearishNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 14
Average target price 39,12 BRL
Last Close Price 34,83 BRL
Spread / Highest target 52,2%
Spread / Average Target 12,3%
Spread / Lowest Target -73,4%
EPS Revisions
Managers and Directors
NameTitle
Harry Schmelzer Chief Executive Officer
André Luís Rodrigues Chief Financial Officer
Décio da Silva Chairman
Nildemar Secches Vice Chairman
Siegfried Kreutzfeld Independent Director
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