Yahoo Finance Earnings Update: Treasury Wine Estates Limited Just Reported And Analysts Are Trimming Their Forecasts
Shareholders in Treasury Wine Estates Limited (ASX:TWE) had a terrible week, as shares crashed 26% to AU$13.03 in the week since its latest interim results. It looks like the results were a bit of a negative overall. While revenues of AU$1.5b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 4.6% to hit AU$0.58 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether analysts have changed their mind on Treasury Wine Estates after the latest results.
Check out our latest analysis for Treasury Wine Estates
Taking into account the latest results, the current consensus from Treasury Wine Estates's twelve analysts is for revenues of AU$2.99b in 2020, which would reflect a satisfactory 3.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to increase 7.4% to AU$0.61. Before this earnings report, analysts had been forecasting revenues of AU$3.19b and earnings per share (EPS) of AU$0.72 in 2020. From this we can that analyst sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
The consensus price target fell 17% to AU$16.13, with the weaker earnings outlook clearly leading analyst valuation estimates. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Treasury Wine Estates, with the most bullish analyst valuing it at AU$22.00 and the most bearish at AU$12.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. It's pretty clear that analysts expect Treasury Wine Estates's revenue growth will slow down substantially, with revenues next year expected to grow 3.3%, compared to a historical growth rate of 7.8% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Treasury Wine Estates.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by the latest results, leading to a lower estimate of Treasury Wine Estates's future valuation.
With that in mind, we wouldn't be too quick to come to a conclusion on Treasury Wine Estates. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Treasury Wine Estates analysts - going out to 2023, and you can see them free on our platform here.
You can also view our analysis of Treasury Wine Estates's balance sheet, and whether we think Treasury Wine Estates is carrying too much debt, for free on our platform here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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