Here's What To Make Of WEC Energy Group's (NYSE:WEC) Decelerating Rates Of Return

What are the early trends we should look for to identify a stock that could multiply in value over the long term? Amongst other things, we'll want to see two things; firstly, a growing return on capital employed (ROCE) and secondly, an expansion in the company's amount of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. In light of that, when we looked at WEC Energy Group (NYSE:WEC) and its ROCE trend, we weren't exactly thrilled.

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What Is Return On Capital Employed (ROCE)?

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on WEC Energy Group is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.051 = US$2.3b ÷ (US$49b - US$4.7b) (Based on the trailing twelve months to June 2025).

Thus, WEC Energy Group has an ROCE of 5.1%. Even though it's in line with the industry average of 5.1%, it's still a low return by itself.

Check out our latest analysis for WEC Energy Group NYSE:WEC Return on Capital Employed October 18th 2025

In the above chart we have measured WEC Energy Group's prior ROCE against its prior performance, but the future is arguably more important. If you'd like, you can check out the forecasts from the analysts covering WEC Energy Group for free.

So How Is WEC Energy Group's ROCE Trending?

The returns on capital haven't changed much for WEC Energy Group in recent years. The company has consistently earned 5.1% for the last five years, and the capital employed within the business has risen 39% in that time. Given the company has increased the amount of capital employed, it appears the investments that have been made simply don't provide a high return on capital.

The Key Takeaway

Long story short, while WEC Energy Group has been reinvesting its capital, the returns that it's generating haven't increased. Unsurprisingly, the stock has only gained 35% over the last five years, which potentially indicates that investors are accounting for this going forward. So if you're looking for a multi-bagger, the underlying trends indicate you may have better chances elsewhere.

WEC Energy Group does come with some risks though, we found 2 warning signs in our investment analysis,and 1 of those shouldn't be ignored...

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If you want to search for solid companies with great earnings, check out this freelist of companies with good balance sheets and impressive returns on equity.

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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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