Yahoo Finance Should You Buy Treasury Wine Estates Limited (ASX:TWE)?
Treasury Wine Estates Limited (ASX:TWE), a beverage company based in Australia, saw a decent share price growth in the teens level on the ASX over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Today I will analyse the most recent data on Treasury Wine Estates’s outlook and valuation to see if the opportunity still exists. View out our latest analysis for Treasury Wine Estates
What is Treasury Wine Estates worth?
Treasury Wine Estates appears to be overvalued by 57.88% at the moment, based on my discounted cash flow valuation. The stock is currently priced at AU$17.80 on the market compared to my intrinsic value of A$11.27. Not the best news for investors looking to buy! Another thing to keep in mind is that Treasury Wine Estates’s share price is quite stable relative to the rest of the market, as indicated by its low beta. This means that if you believe the current share price should move towards its intrinsic value over time, a low beta could suggest it is not likely to reach that level anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range again.
What kind of growth will Treasury Wine Estates generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 87.62% over the next couple of years, the future seems bright for Treasury Wine Estates. It looks like higher cash flows is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in TWE’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe TWE should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on TWE for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for TWE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Treasury Wine Estates. You can find everything you need to know about Treasury Wine Estates in the latest infographic research report. If you are no longer interested in Treasury Wine Estates, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
