Discounted Cash Flow Valuation of WEG

Abstract

This report exhibits conducts a detailed analysis of WEG S.A., a leading entity in the global electric-electronic equipment industry, using the discounted cash flow model to evaluate its fair market value. WEG operates with manufacturing facilities in 12 countries and has a commercial presence in over 135 countries, indicating a broad operational scope and considerable influence in various sectors such as infrastructure, steel, pulp and paper, oil and gas, mining, among others. The firm employs over 36,900 individuals globally, demonstrating its commitment to innovation and the development of solutions in line with current trends in energy efficiency, renewable energy, and electric mobility. This study thoroughly examines WEG’s business model, competitive environment, and industry dynamics, employing analyses to forecast future cash flows based on historic performance and establish a precise valuation. The fair value found discounting future cash flows to present value using the DCF model was 42,75 R$, presenting a 15,9% of upside to the closing price found in February 27th of 2024.