The Treasury Wine Estates Ltd (ASX: TWE) share price has clawed its way back above $12 during this year.
Shares in the Australian winemaker are commanding a $12.21 price tag, up 1.3% from its previous close. Although, much more impressive is the nearly 28% gain in the Treasury Wine share price since the start of the year. For context, the S&P/ASX 200 Index (ASX: XJO) is up 10.5% over the same period.
After a shocking year in 2020 — falling 41% in value — the wine company has been rebounding strongly. The only question is: will the positive trend continue for its share price in 2022?
What shape is Treasury Wine heading into 2022 in?
Despite the disruptions caused by China's introduction of tariffs on the company's wine, Treasury Wine has managed well this year. The Australian winemaker pivoted its focus away from China and looked to expand its presence in other markets.
In its FY21 results, net sales revenue slipped 3% to $2,569.6 million. However, net profit after tax inched 1.8% higher to $250 million. Not bad considering the company lost a substantial market due to import duties.
Additionally, Treasury Wine's balance sheet remains in reasonably good condition. At the end of June 2021, company debt was at ~$915 million, representing a debt to equity ratio of 25.5%.
Typically a ratio below 40% is considered favourable. In addition, ASX-listed Treasury Wines counted ~$448 million worth of cash and cash equivalents at its disposal.
However, it is important to note these figures are now different following the acquisition of Frank Family Vineyards in the United States. When announced in November, Treasury Wine stated the acquisition came at a cost of US$315 million in a combination of cash and debt.
Is there upside in the Treasury Wine share price?
Shareholders of ASX-listed Treasury Wine Estates have had a year worth celebrating in 2021. Yet, some analysts are expecting the good times to keep on rolling as we move into 2022.
According to analysts at Citi, the winemaker's shares could be worth $13.80 per share. This would suggest a further 12.8% upside to the Treasury Wine share price from here. The broker is banking on that a strong first quarter for the company's US rival, Duckhorn Portfolio, would indicate a similarly strong result for the ASX-listed company.
Sharing the same sentiment, Morgans has an add rating and a price target of $14.06 on Treasury Wine. The team believes the company will deliver strong earnings growth from the second half of FY22 onwards.
