Treasury Wine Estates (ASX:TWE): Valuation Check After Major Americas Impairment and Decade-Low Share Price
Treasury Wine Estates (ASX:TWE) has jolted investors by flagging a hefty non cash impairment of up to A$687 million on its Americas business, after a deteriorating U.S. wine outlook sent the stock to decade lows.
See our latest analysis for Treasury Wine Estates.
The A$687 million non cash hit lands after a brutal run, with a roughly 52 percent year to date share price decline and a similarly steep one year total shareholder return. This signals that investors now see higher structural risk and fading momentum despite modest underlying earnings growth.
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With the share price now more than 50 percent below recent highs and analysts still seeing upside, investors are left to ponder: is Treasury Wine Estates a value play in disguise, or is the market correctly pricing in weaker growth?
Most Popular Narrative: 26.6% Undervalued
With Treasury Wine Estates last closing at A$5.49 versus a narrative fair value of A$7.48, the implied upside rests on a carefully modelled profit rebuild.
The analysts have a consensus price target of A$9.851 for Treasury Wine Estates based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$12.0, and the most bearish reporting a price target of just A$7.0.
Behind that seemingly modest growth outlook sits a sharp reset in revenue expectations, a richer margin profile and a future earnings multiple that still assumes investor confidence returns. Curious which of those levers does most of the heavy lifting in the A$7.48 fair value?
Result: Fair Value of A$7.48 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, structural shifts in Chinese demand and persistent U.S. brand underperformance could quickly undermine the expected margin rebuild and re-rating story.
Find out about the key risks to this Treasury Wine Estates narrative.
Build Your Own Treasury Wine Estates Narrative
If you see the story differently or simply prefer to dive into the numbers yourself, you can build a personalised view in minutes: Do it your way.
A great starting point for your Treasury Wine Estates research is our analysis highlighting 4 key rewards and 1 important warning sign 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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