Latest news with #TreasuryWineEstates'
Yahoo
01-04-2025
- Business
- Yahoo
Are Poor Financial Prospects Dragging Down Treasury Wine Estates Limited (ASX:TWE Stock?
Treasury Wine Estates (ASX:TWE) has had a rough three months with its share price down 14%. Given that stock prices are usually driven by a company's fundamentals over the long term, which in this case look pretty weak, we decided to study the company's key financial indicators. In this article, we decided to focus on Treasury Wine Estates' ROE. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. ROE can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Treasury Wine Estates is: 3.1% = AU$153m ÷ AU$4.9b (Based on the trailing twelve months to December 2024). The 'return' refers to a company's earnings over the last year. One way to conceptualize this is that for each A$1 of shareholders' capital it has, the company made A$0.03 in profit. View our latest analysis for Treasury Wine Estates We have already established that ROE serves as an efficient profit-generating gauge for a company's future earnings. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don't share these attributes. It is quite clear that Treasury Wine Estates' ROE is rather low. Even when compared to the industry average of 12%, the ROE figure is pretty disappointing. For this reason, Treasury Wine Estates' five year net income decline of 10% is not surprising given its lower ROE. We believe that there also might be other aspects that are negatively influencing the company's earnings prospects. For instance, the company has a very high payout ratio, or is faced with competitive pressures. So, as a next step, we compared Treasury Wine Estates' performance against the industry and were disappointed to discover that while the company has been shrinking its earnings, the industry has been growing its earnings at a rate of 12% over the last few years. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. Is Treasury Wine Estates fairly valued compared to other companies? These 3 valuation measures might help you decide. With a high three-year median payout ratio of 100% (implying that -0.2% of the profits are retained), most of Treasury Wine Estates' profits are being paid to shareholders, which explains the company's shrinking earnings. With only a little being reinvested into the business, earnings growth would obviously be low or non-existent. Our risks dashboard should have the 2 risks we have identified for Treasury Wine Estates. Moreover, Treasury Wine Estates has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Existing analyst estimates suggest that the company's future payout ratio is expected to drop to 68% over the next three years. The fact that the company's ROE is expected to rise to 13% over the same period is explained by the drop in the payout ratio. On the whole, Treasury Wine Estates' performance is quite a big let-down. The low ROE, combined with the fact that the company is paying out almost if not all, of its profits as dividends, has resulted in the lack or absence of growth in its earnings. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Sign in to access your portfolio
Yahoo
05-03-2025
- Business
- Yahoo
Treasury Wine Estates' (ASX:TWE) Dividend Will Be Increased To A$0.20
Treasury Wine Estates Limited (ASX:TWE) will increase its dividend from last year's comparable payment on the 2nd of April to A$0.20. This will take the dividend yield to an attractive 3.8%, providing a nice boost to shareholder returns. Check out our latest analysis for Treasury Wine Estates A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 207% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing. Looking forward, earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 50%, which is in a comfortable range for us. The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2015, the dividend has gone from A$0.13 total annually to A$0.40. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future. With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Over the past five years, it looks as though Treasury Wine Estates' EPS has declined at around 20% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited. In conclusion, we have some concerns about this dividend, even though it being raised is good. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. The dividend doesn't inspire confidence that it will provide solid income in the future. Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Treasury Wine Estates (of which 1 is significant!) you should know about. Is Treasury Wine Estates not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Sign in to access your portfolio
Yahoo
28-02-2025
- Business
- Yahoo
Do These 3 Checks Before Buying Treasury Wine Estates Limited (ASX:TWE) For Its Upcoming Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Treasury Wine Estates Limited (ASX:TWE) is about to go ex-dividend in just 4 days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. This means that investors who purchase Treasury Wine Estates' shares on or after the 5th of March will not receive the dividend, which will be paid on the 2nd of April. The company's next dividend payment will be AU$0.20 per share, and in the last 12 months, the company paid a total of AU$0.40 per share. Last year's total dividend payments show that Treasury Wine Estates has a trailing yield of 3.6% on the current share price of AU$11.02. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Treasury Wine Estates has been able to grow its dividends, or if the dividend might be cut. View our latest analysis for Treasury Wine Estates Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Treasury Wine Estates paid out a disturbingly high 207% of its profit as dividends last year, which makes us concerned there's something we don't fully understand in the business. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It paid out 86% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth. It's good to see that while Treasury Wine Estates's dividends were not covered by profits, at least they are affordable from a cash perspective. Still, if the company repeatedly paid a dividend greater than its profits, we'd be concerned. Very few companies are able to sustainably pay dividends larger than their reported earnings. Click here to see the company's payout ratio, plus analyst estimates of its future dividends. When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Readers will understand then, why we're concerned to see Treasury Wine Estates's earnings per share have dropped 20% a year over the past five years. When earnings per share fall, the maximum amount of dividends that can be paid also falls. The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, Treasury Wine Estates has lifted its dividend by approximately 12% a year on average. That's intriguing, but the combination of growing dividends despite declining earnings can typically only be achieved by paying out a larger percentage of profits. Treasury Wine Estates is already paying out 207% of its profits, and with shrinking earnings we think it's unlikely that this dividend will grow quickly in the future. Is Treasury Wine Estates an attractive dividend stock, or better left on the shelf? Earnings per share have been in decline, which is not encouraging. What's more, Treasury Wine Estates is paying out a majority of its earnings and over half its free cash flow. It's hard to say if the business has the financial resources and time to turn things around without cutting the dividend. It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being. With that being said, if you're still considering Treasury Wine Estates as an investment, you'll find it beneficial to know what risks this stock is facing. Our analysis shows 2 warning signs for Treasury Wine Estates that we strongly recommend you have a look at before investing in the company. Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Sign in to access your portfolio
Yahoo
15-02-2025
- Business
- Yahoo
Treasury Wine Estates (ASX:TWE) Has Announced That It Will Be Increasing Its Dividend To A$0.20
Treasury Wine Estates Limited (ASX:TWE) has announced that it will be increasing its dividend from last year's comparable payment on the 2nd of April to A$0.20. This makes the dividend yield 3.7%, which is above the industry average. View our latest analysis for Treasury Wine Estates If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, the company was paying out 207% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level. Looking forward, earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 50%, which is in a comfortable range for us. The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of A$0.13 in 2015 to the most recent total annual payment of A$0.40. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future. Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Over the past five years, it looks as though Treasury Wine Estates' EPS has declined at around 20% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend. In conclusion, we have some concerns about this dividend, even though it being raised is good. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income. Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Treasury Wine Estates you should be aware of, and 1 of them is a bit unpleasant. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Sign in to access your portfolio
Bloomberg
13-02-2025
- Business
- Bloomberg
Treasury Wine CEO on Strategy, China Demand & Trade
Australia's Treasury Wine Estates, owner of Penfolds, posted a higher half-year profit but flagged some weakness in its premium brands. Treasury Wine Estates' Managing Director and CEO Tim Ford discusses the results and outlook from Melbourne on "Insight with Haslinda Amin". (Source: Bloomberg)
