In December 2018, Treasury Wine Estates Limited (ASX:TWE) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 23% next year, though this is relatively lower than the previous 5-year average earnings growth of 51%. Presently, with latest-twelve-month earnings at AU$360m, we should see this growing to AU$445m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
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How will Treasury Wine Estates perform in the near future?
Over the next three years, it seems the consensus view of the 15 analysts covering TWE is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of TWE's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of AU$360m and the final forecast of AU$626m by 2022, the annual rate of growth for TWE’s earnings is 15%. EPS reaches A$0.93 in the final year of forecast compared to the current A$0.50 EPS today. Margins are currently sitting at 14%, which is expected to expand to 18% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Treasury Wine Estates, there are three essential aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Treasury Wine Estates worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Treasury Wine Estates is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Treasury Wine Estates? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.