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Why Treasury Wine Estates Ltd has rallied 52% in a year

Treasury Wine Estates Ltd (ASX: TWE) is up nearly 4% at the time of writing to $19.90, rallying 52% in a year. The company is trading on a forward price-earnings-ratio (PER) of 44x and paying an annual dividend yield of 1.4%.

The continuing rally is helped by a recent presentation in which the company said it plans to deliver 25% earnings before interest, tax, SGARA and material items (EBITS) margins over time, with EBITS up 25% in 1H18 and earnings per share (EPS) up 38%. Wine export growth rates to North Asia, including China, continue to be strong on the back of relatively flat total export growth.

Coca-Cola Amatil Ltd (ASX: CCL), which is in the same sector as Treasury Wine Estates, has fallen 2% in a year, although has rallied 16% in six months. The shares offer more value than Treasury Wine Estates, trading on a forward PER of 17x but lower forecast EPS growth, and paying an annual dividend yield of 5%, which is 70% franked.

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Motley Fool contributor Rosemary Steinfort has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Coca-Cola Amatil Limited and Treasury Wine Estates Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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