TWE AU

Treasury Wine Estates Ltd

Consumer


Presented:05/29/2019
Price:A$15.17
Cap:$8.54B
Current Price:A$11.88
Cap:$7.55B

Presented

Date05/29/2019
PriceA$15.17
Market Cap$8.54B
Ent Value$9.10B
P/E Ratio27.77x
Book ValueA$5.03
Div Yield2.37%
Shares O/S718.80M
Ave Daily Vol3,473,874
Short IntN/A

Current

PriceA$11.88
Market Cap$7.55B
Treasury Wine Estates Ltd. engages in the production and marketing of wine. It operates through the following segments: Australia and New Zealand, Americas, Asia, and Europe. The Australia and New Zealand segment manufactures, sells, and markets of wine within Australia and New Zealand; and also distributes beer and cider. The Americas segment engages offers the manufacture, sale, and marketing of wine in the Americas region. The Asia segment involves the sale and marketing of wine within Asia, including the Middle East and Africa. The Europe segment covers the manufacture, sale, and marketing of wine within Europe. The company was founded on March 20, 1957 and is headquartered in Southbank, Australia.

Publicly traded companies mentioned herein: Brown-Forman Corp (BF/B), Constellation Brands Inc (STZ), Diageo plc (DEO), Treasury Wine Estates Ltd (TWE AU)

Highlights

Treasury Wine Estates (TWE) is the fourth largest winemaker globally. It was spun-off from Foster’s Group in 2011 when it “wasn’t a very good business,” said the presenter. However, in 2014, Michael Clarke, a former food executive with Kraft Foods and Premier Foods, was appointed CEO and things started to turn around. While Clarke is credited with a positive transformation, which includes growing TWE’s Asia business to the point where it is the largest wine importer into China, the growth does not come without risk. Additionally, its 19 Crimes brand has been a hit, but the presenter thinks growth is slowing, and he sees a combination of underappreciated risks around TWE’s US business (~1/3 of EBIT), management departures and stock sales, as well as earnings quality issues, driving the stock lower over the next 12 - 18 months. He is short at this time and sees the potential for the stock to decline to the A$10 - A$11 range (from A$15 today) over 12 months.

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