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Why the Treasury Wine Estates Ltd share price finished 4% higher

The Treasury Wine Estates Ltd (ASX: TWE) closed nearly 4.2% higher today at $14.85 after the wine producer informed the market last night that it still expects to achieve 25% EBITS growth over FY 2019. It was also the top performer on the S&P/ ASX200 (ASX: XJO) today.

It told investors to expect first half EBITS to come in between $335 million to $340 million, which is above what it described as analysts’ consensus forecasts.

Management may have felt the need to flag this as some analysts were reportedly concerned that the imposition of tariffs by the US on Chinese imports would hurt China’s economy to such an extent that consumers might cut back on discretionary products like Australian wine.

Despite today’s share price rise the Treasury share price is still down around 33% from highs around $20 it hit in September 2018 despite it maintaining its profit guidance for fiscal 2019. According to Commsec, analysts are expecting 63.8 cents in earnings per share over FY 2018, which places the stock on around 23x estimated forward earnings.

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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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