Latest news with #TreasuryWineEstates'
West Australian
13-08-2025
- Business
- West Australian
Treasury Wine Estates faces China growth concerns amid changing drinking habits
There are 'cracks appearing' in Treasury Wine Estates' China prospects, analysts say, as consumer preferences shift from large banquets to lifestyle-oriented occasions. Unveiling its full-year results on Wednesday, Australia's top wine producer flagged a recent shift in alcohol consumption behaviour in China, with less large-scale banqueting and more smaller scale occasion events. Citi analyst Sam Teeger warned this did not 'bode well' for the rest of the new financial year, with Barrenjoey's Tom Kierath expecting the China commentary to weigh on TWE's shares on Wednesday. However, the stock was up 3.5 to $7.90 in early trade. TWE said full-year net profit before material items was 15.5 per cent higher than the previous financial year at $470.6 million. Earnings grew 17 per cent to $770.3m, driven by its high-end Penfolds label and a full year contribution from its Californian wine operation DAOU. It also announced a share buyback of up to $200m. Penfolds division earnings rose 13 per cent to $477m, driven by strong growth in its Bin and Icon shipments to China. Outgoing chief executive Tim Ford said it 'continued to face headwinds in a number of markets'. Penfolds managing director Tom King later told analysts on a call it had strong plans for the mid-autumn festival in China in October and was 'feeling pretty good around how the initial collection release has gone down in China'. 'I think we've proven over recent years that we're pretty good at adapting to shifting environments,' he said. 'China is a very dynamic market for sure and things can change very quickly. 'We've got levers that we can pull as demand increases and decreases across our global business.' But Mr Teeger said: 'We think today's incrementally more cautious tone on (China) could lead to some of the China bulls on the stock to moderate their growth expectations. RBC Capital Markets analyst Michael Toner said a key question was whether the softness observed in China in June and July would persist for the remainder of the financial year. Treasury Americas delivered a 33.9 per cent lift in earnings to $308.6m, despite slowing sales for the Snoop Dogg-backed 19 Crimes. Treasury Premium Brands suffered a 27.6 per cent decline in earnings to $55.1m. TWE is forecasting a $50m hit to revenue this financial year from changes to its wine distribution model in California, with its local distributor ceasing operations later this year. It declared a final dividend of 20¢ a share. Mr Ford will leave the company at the end of September to make way for incoming chief Sam Fischer, who was poached from alcohol giant Lion.
Yahoo
11-06-2025
- Business
- Yahoo
Are Investors Undervaluing Treasury Wine Estates Limited (ASX:TWE) By 47%?
Using the 2 Stage Free Cash Flow to Equity, Treasury Wine Estates fair value estimate is AU$15.36 Treasury Wine Estates' AU$8.17 share price signals that it might be 47% undervalued Our fair value estimate is 38% higher than Treasury Wine Estates' analyst price target of AU$11.16 Does the June share price for Treasury Wine Estates Limited (ASX:TWE) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the expected future cash flows and discounting them to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Don't get put off by the jargon, the math behind it is actually quite straightforward. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (A$, Millions) AU$472.8m AU$434.4m AU$498.0m AU$496.8m AU$500.5m AU$507.5m AU$517.0m AU$528.3m AU$541.1m AU$555.1m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x3 Analyst x1 Est @ 0.74% Est @ 1.40% Est @ 1.87% Est @ 2.19% Est @ 2.42% Est @ 2.58% Present Value (A$, Millions) Discounted @ 6.4% AU$444 AU$384 AU$413 AU$387 AU$367 AU$350 AU$335 AU$321 AU$309 AU$298 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = AU$3.6b We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.9%. We discount the terminal cash flows to today's value at a cost of equity of 6.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = AU$555m× (1 + 2.9%) ÷ (6.4%– 2.9%) = AU$16b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$16b÷ ( 1 + 6.4%)10= AU$8.9b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is AU$12b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of AU$8.2, the company appears quite good value at a 47% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Treasury Wine Estates as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.4%, which is based on a levered beta of 0.800. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Treasury Wine Estates Strength Debt is not viewed as a risk. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Beverage market. Opportunity Annual earnings are forecast to grow faster than the Australian market. Trading below our estimate of fair value by more than 20%. Threat Dividends are not covered by earnings and cashflows. Annual revenue is forecast to grow slower than the Australian market. Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Can we work out why the company is trading at a discount to intrinsic value? For Treasury Wine Estates, there are three additional factors you should look at: Risks: Be aware that Treasury Wine Estates is showing 2 warning signs in our investment analysis , and 1 of those is a bit concerning... Future Earnings: How does TWE's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here. 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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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
