Does Treasury Wine Estates Limited's (ASX:TWE) Weak Fundamentals Mean That The Market Could Correct Its Share Price?

Simply Wall St.03-28

Most readers would already be aware that Treasury Wine Estates' (ASX:TWE) stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2422187743?lang=en_US&edition=fundamental","thumbnail":"https://s.yimg.com/uu/api/res/1.2/KY2Q5F5VhKsl6kikegapyw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/a2df42ed0a47d9732f3bf156a253b2f7","is_english":true,"pubTime":"2024-03-28 13:02","share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","id":"2422187743","market":"us","top_or_hot":-1,"title":"Does Treasury Wine Estates Limited's (ASX:TWE) Weak Fundamentals Mean That The Market Could Correct Its Share Price?","media":"Simply Wall St.","content":"<div>\n<p>Most readers would already be aware that Treasury Wine Estates' (ASX:TWE) stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial...</p>\n\n<a href=\"https://finance.yahoo.com/news/does-treasury-wine-estates-limiteds-050253733.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance_au","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Does Treasury Wine Estates Limited's (ASX:TWE) Weak Fundamentals Mean That The Market Could Correct Its Share Price?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDoes Treasury Wine Estates Limited's (ASX:TWE) Weak Fundamentals Mean That The Market Could Correct Its Share Price?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-03-28 13:02 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/does-treasury-wine-estates-limiteds-050253733.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Most readers would already be aware that Treasury Wine Estates' (ASX:TWE) stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial...</p>\n\n<a href=\"https://finance.yahoo.com/news/does-treasury-wine-estates-limiteds-050253733.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK7505","symbol_name":"食品股","start_time":0,"source_url":"https://finance.yahoo.com/news/does-treasury-wine-estates-limiteds-050253733.html","article_id":"2422187743","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/KY2Q5F5VhKsl6kikegapyw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/a2df42ed0a47d9732f3bf156a253b2f7"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2422187743","pubTimestamp":1711602173,"sourceInfo":{"source_id":"yahoofinance_au","name":"Yahoo Finance AU"},"weMediaInfo":null,"summary":"Most readers would already be aware that Treasury Wine Estates'  stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial indicators as the markets usually pay for long-term fundamentals, and in this case, they don't look very promising. In this article, we decided to focus on Treasury Wine Estates'  ROE.Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders.Treasury Wine Estates' Earnings Growth And 4.9% ROE. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth . Doing so will help them establish if the stock's future looks promising or om","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7505":"食品股","BK7097":"酿酒商与葡萄酒商","TWE.AU":"TREASURY WINE ESTATES LTD"},"translate_title":"国库葡萄酒庄园有限公司（ASX：TWE）疲软的基本面是否意味着市场可能会调整其股价？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TWE.AU":1},"content_text":"Most readers would already be aware that Treasury Wine Estates' (ASX:TWE) stock increased significantly by 13% over the past three months. We, however wanted to have a closer look at its key financial indicators as the markets usually pay for long-term fundamentals, and in this case, they don't look very promising. In this article, we decided to focus on Treasury Wine Estates'  ROE. \n Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. \n See our latest analysis for Treasury Wine Estates \n How To Calculate Return On Equity? \n ROE can be calculated by using the formula: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for Treasury Wine Estates is:\n4.9% = AU$233m ÷ AU$4.8b (Based on the trailing twelve months to December 2023).\n The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each A$1 of shareholders' capital it has, the company made A$0.05 in profit. \n What Is The Relationship Between ROE And Earnings Growth? \n Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or \"retains\", and how effectively it does so, we are then able to assess a company’s earnings growth potential. 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. \n Treasury Wine Estates' Earnings Growth And 4.9% ROE \n At first glance, Treasury Wine Estates' ROE doesn't look very promising. Next, when compared to the average industry ROE of 12%, the company's ROE leaves us feeling even less enthusiastic. For this reason, Treasury Wine Estates' five year net income decline of 8.9% is not surprising given its lower ROE. We reckon that there could also be other factors at play here. Such as - low earnings retention or poor allocation of capital. \n However, when we compared Treasury Wine Estates' growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 10% in the same period. This is quite worrisome. \n\n\n\n  ASX:TWE Past Earnings Growth March 28th 2024\n \n\n The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). Doing so will help them establish if the stock's future looks promising or ominous. Has the market priced in the future outlook for TWE? You can find out in our latest intrinsic value infographic research report.  \n Is Treasury Wine Estates Making Efficient Use Of Its Profits? \n With a high three-year median payout ratio of 84% (implying that 16% 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. You can see the 4 risks we have identified for Treasury Wine Estates by visiting our risks dashboard for free  on our platform here. \n Additionally, Treasury Wine Estates has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 68% of its profits over the next three years. However, Treasury Wine Estates' ROE is predicted to rise to 12% despite there being no anticipated change in its payout ratio. \n Conclusion \n In total, we would have a hard think before deciding on any investment action concerning Treasury Wine Estates. Because the company is not reinvesting much into the business, and given the low ROE, it's not surprising to see the lack or absence of growth in its earnings. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2422187743"}