OTC:WELPP
WISCONSIN ELECTRIC POWER CO
A stable regional utility offering essential electricity and gas services with a track record of consistent profitability and regulated rate structures.
Key Metrics
Investment Thesis
Bull Case
Wisconsin Electric Power offers a defensive income profile with regulated earnings that provide stability during economic downturns, making it attractive for conservative portfolios. The company's successful transition into renewable energy positions it well for potential policy incentives and growing corporate demand for green power certificates. Strong free cash flow generation allows for consistent dividend payments or share repurchases, enhancing total return potential for long-term holders.
Bear Case
The utility operates in a low-growth sector with limited upside potential compared to high-growth tech or biotech stocks, which may not suit aggressive growth investors. Heavy reliance on regulatory approvals means earnings growth is predictable but slow, and any adverse commission decisions could immediately suppress profitability. As a capital-intensive business with massive fixed assets, the company faces ongoing pressure from rising maintenance costs and the need for continuous reinvestment to avoid stranded assets.
About WISCONSIN ELECTRIC POWER CO
Wisconsin Electric Power Company is a diversified energy provider serving residential, commercial, and industrial customers across Wisconsin and select international markets. The utility generates revenue primarily through regulated electricity sales, natural gas distribution, and related infrastructure services while navigating volatile commodity markets. Key products include reliable electric power delivery, competitive natural gas rates, and strategic investments in renewable generation assets to meet growing demand.
Analysis
Management Discussion
The company reported a 27% increase in net profit to $628.0M in the latest year, driven by robust operational cash flows of $1.13B and strategic debt management with $799.5M in new issuances offsetting repayments. Revenue growth accelerated to $4.49B compared to the previous year's $3.98B, reflecting successful demand recovery and potential rate adjustments approved by regulators. Significant capital expenditures of $2.74B indicate heavy investment in grid infrastructure and renewable assets to support long-term sustainability goals and capacity expansion.
Industry Overview
The North American utility sector is characterized by stable demand for essential energy services but faces headwinds from inflation-driven fuel costs and the transition toward decentralized renewable generation. Regulated monopolies dominate local distribution while competitive markets exist in wholesale trading and renewable energy production, creating a hybrid operating model. Industry leaders are prioritizing grid modernization and cybersecurity to meet evolving customer expectations and regulatory mandates for decarbonization.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $4.07B | $4.04B | $3.98B | $4.49B |
| Cost of Revenue | $1.69B | $1.45B | $1.30B | $1.50B |
| Gross Profit | $2.38B | $2.59B | $2.68B | $2.99B |
| Operating Expenses | $1.44B | $1.57B | $1.62B | $1.82B |
| Operating Income | $940.0M | $1.02B | $1.06B | $1.17B |
| Stock-Based Comp | $13.2M | $3.3M | $15.8M | $19.0M |
| D&A | $479.7M | $525.0M | $573.7M | $629.9M |
| Non-Operating Income | $-409.0M | $-397.7M | $-410.4M | $-427.8M |
| Interest Expense | $458.4M | $466.5M | — | — |
| Interest Income | — | — | $9.8M | $2.9M |
| Pre-Tax Income | $531.0M | $624.5M | $650.8M | $743.0M |
| Income Tax | $133.1M | $142.7M | $136.4M | $115.0M |
| Continuing Ops | $397.9M | $481.8M | $514.4M | $628.0M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $397.9M | $481.8M | $514.4M | $628.0M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $397.9M | $481.8M | $514.4M | $628.0M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $1.21B | $1.21B | $1.27B | $1.36B |
| Cash & Equivalents | $6.1M | $6.1M | $400.0K | $0 |
| Accounts Receivable | $582.6M | — | — | — |
| Other Current Assets | $618.6M | $1.20B | $1.27B | $1.36B |
| Long-Term Assets | $13.81B | $14.64B | $15.93B | $18.34B |
| PP&E (Net) | $10.72B | $11.59B | $12.81B | $15.21B |
| Operating Leases | $8.4M | $10.2M | $12.2M | $13.3M |
| Other LT Assets | $3.09B | $3.04B | $3.10B | $3.12B |
| Total Assets | $15.02B | $15.84B | $17.20B | $19.70B |
| Current Liabilities | $1.37B | $1.48B | $1.46B | $1.78B |
| Accounts Payable | $400.5M | — | — | — |
| Current Debt | $8.9M | $309.0M | $259.2M | $9.3M |
| Current Leases | $600.0K | $800.0K | $800.0K | $900.0K |
| Other Current Liab | $962.3M | $1.18B | $1.20B | $1.77B |
| Long-Term Liabilities | $9.48B | $9.27B | $10.23B | $11.14B |
| Long-Term Debt | $3.35B | $3.05B | $3.73B | $4.52B |
| LT Operating Leases | $7.8M | $9.4M | $11.5M | $12.5M |
| Other LT Liab | $5.66B | $5.86B | $6.31B | $5.93B |
| Total Liabilities | $10.85B | $10.76B | $11.69B | $12.92B |
| Shareholders' Equity | $4.17B | $5.08B | $5.51B | $6.78B |
| Paid-In Capital | $1.75B | $2.55B | $2.70B | $3.95B |
| Retained Earnings | $2.06B | $2.17B | $2.44B | $2.47B |
| Total L&E | $15.02B | $15.84B | $17.20B | $19.70B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $396.7M | $480.6M | $513.2M | $626.8M |
| Non-Cash Adjustments | $23.7M | $505.8M | $574.1M | $357.9M |
| Working Capital Changes | $216.6M | $-47.3M | $177.2M | $143.1M |
| Cash from Operations | $637.0M | $939.1M | $1.26B | $1.13B |
| Capital Expenditures | $930.4M | $1.09B | $1.44B | $2.74B |
| Cash from Investing | $-914.0M | $-1.23B | $-1.54B | $-2.70B |
| Debt Issuances | $500.0M | $0 | $947.4M | $799.5M |
| Debt Repayments | $8.8M | $8.9M | $309.0M | $259.2M |
| Cash from Financing | $321.7M | $248.0M | $268.2M | $1.58B |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $44.7M | $-40.2M | $-5.0M | $100.0K |
| Beginning Cash | $3.0M | $47.7M | $7.5M | $2.5M |
| Ending Cash | $47.7M | $7.5M | $2.5M | $2.6M |
Frequently Asked Questions
How does WISCONSIN ELECTRIC POWER CO make money?
Regulated Electric Power Sales: Core revenue stream from selling electricity to residential and commercial customers under state-regulated frameworks. Natural Gas Distribution: Revenue derived from delivering natural gas to heating and cooking needs for local households and businesses. Renewable Energy Investments: Income generated from owned wind and solar projects, as well as green power marketing contracts with corporate clients. Ancillary Services: Earnings from transmission services, demand response programs, and environmental compliance credits.
What are the main risks for WELPP?
Regulatory Rate Caps: Utility commissions may limit price increases, potentially capping revenue growth even if operating costs rise due to fuel inflation or maintenance needs. Commodity Price Volatility: Fluctuations in wholesale electricity and natural gas prices can impact margins for competitive segments and affect hedging strategy effectiveness. Cybersecurity Threats: Increasing digital reliance exposes the grid to sophisticated cyberattacks that could disrupt service delivery and incur significant remediation costs. Climate Transition Risks: Stricter environmental regulations and physical climate impacts may require substantial capital expenditures for grid modernization and asset hardening.
What is WELPP's competitive advantage?
Regulated Monopoly Status: Protected market position in Wisconsin ensures stable revenue streams insulated from direct price competition for core utility services. Strong Credit Profile: Investment-grade credit rating facilitates low-cost capital access to fund necessary infrastructure upgrades and maintain operational liquidity. Diversified Revenue Mix: Combination of regulated returns and competitive renewable energy sales mitigates risks associated with reliance on a single energy source or market segment.
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.