A Fresh Look at WEC Energy Group (WEC) Valuation After Latest Analyst Upgrade on AI and Data Center Outlook

This week, WEC Energy Group stock caught attention after Ladenburg Thalmann upgraded its rating. The firm highlighted expected growth fueled by rising demand from artificial intelligence and data centers. Investors are watching how these trends could shape WEC’s future prospects.

See our latest analysis for WEC Energy Group.

WEC Energy Group’s share price has surged 24.3% year-to-date, outpacing its sector as excitement grows over its updated growth outlook tied to AI and data center demand. In addition to the latest analyst upgrade, the company’s reliable dividends and a stellar 50.1% three-year total shareholder return suggest momentum is building both in the short and long term.

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With the stock’s sharp gains and bullish analyst calls, the key question now is whether WEC Energy Group remains undervalued, or if the market has already accounted for its future growth. Could there still be a buying opportunity?

Most Popular Narrative: 1.4% Undervalued

With WEC Energy Group's fair value estimate at $118.54 and the last closing price at $116.84, the market is nearly aligned with the prevailing narrative’s outlook. This sets the stage for one of the central arguments supporting that fair value.

Accelerating demand for electricity, especially from new sources such as data centers, is described as a "once in a generation opportunity" for regulated utilities. This offers the potential for sustained rate base and earnings growth.

Read the complete narrative.

Curious how a single growth surge could justify a premium for a utility stock? Hint: the assumptions behind this price involve bold profit growth and a rare bet on industry transformation. Want to see exactly which projections power the narrative’s optimistic valuation?

Result: Fair Value of $118.54 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising capital costs and regulatory uncertainty could still dampen WEC’s bullish outlook. These factors could potentially limit upside if key projects face delays or setbacks.

Find out about the key risks to this WEC Energy Group narrative.

Another View: Market Multiple Comparison

Looking at WEC Energy Group through another lens, its price-to-earnings ratio is 22.6x, which is above both the global integrated utilities industry average of 18.5x and its own fair ratio of 20.7x. This suggests the stock trades at a premium compared to peers and what the market could justify over time, raising the risk that expectations are already high. How sustainable is this premium if growth projections falter?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own WEC Energy Group Narrative

If you want to dig deeper or craft your own perspective, it's quick and easy to analyze the numbers and tell your story. Just Do it your way.

A great starting point for your WEC Energy Group research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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