This ASX wine stock has been smashed over the past year.
Treasury Wine Estates Ltd (ASX: TWE) shares are now worth less than half of their 52-week high of $8.63. They are down roughly 20% in 2026 and around 50% over the past 12 months.
But after climbing around 6% over the past month, investors may be wondering if the worst is finally over.
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A difficult backdrop
There is no denying the last year has been painful for Treasury Wine Estates shareholders.
Back in October, the company withdrew its FY26 earnings guidance and paused its share buyback. Problems in China and the US weighed heavily on the business. The ASX wine stock also reported a large first-half loss after impairments hammered its result.
Weak consumer demand, earnings pressure, and broader challenges across the wine industry all hurt sentiment.
The dividend outlook also deteriorated quickly. In fact, the market currently expects no dividend payout in FY26. That alone could scare away many income investors.
Looking beyond short-term pain
However, it is important to look beyond the short-term pain of the ASX wine stock.
And importantly, the company's latest operating update gave investors some much-needed positives. In the March quarter, China depletions jumped 40% on a seasonally adjusted basis. ANZ depletions increased 11%. Asia excluding China climbed 14%, while US market depletions improved 9.1%.
Those numbers matter. They suggest demand is starting to recover in several key markets after an extremely difficult period.
The US business also appears to be stabilising. China demand remains strong. At the same time, Treasury Wine Estates is rolling out operational changes designed to improve execution and efficiency.
If that momentum continues, earnings could gradually rebuild from here.
Income recovery on the horizon
And that is where the longer-term income story becomes interesting. According to CommSec consensus estimates, the market expects partially franked dividends of 15 cents per share in FY27 and 24 cents per share in FY28.
At the current price of the ASX wine stock, that implies a potential forward dividend yield of around 3.3% in FY27. That figure climbs to more than 5.3% in FY28 before factoring in franking credits.
This is not an ASX stock you buy for immediate passive income. Instead, investors are backing a recovery story. The bet is that income returns as earnings improve over time.
Capital growth ahead?
There could also be meaningful capital growth if sentiment keeps recovering.
Treasury Wine Estates still owns a premium portfolio of wine brands. Penfolds remains a major earnings driver and one of Australia's most recognised luxury wine labels.
The ASX wine stock is also restructuring operations, which could help margins improve in the years ahead. Its balance sheet looks more stable too. Recent refinancing activity has strengthened liquidity and given the business more flexibility while it navigates softer conditions.
What next for the ASX wine stock?
According to date on TradingView six out of 17 brokers see the ASX wine stock as a buy or a strong buy. The other 11 analysts rate it a hold and the average 12-month price target is set at $5.24, which points to a 25% upside. The most bullish forecast is $7,90, suggesting a 88% upside at the time of writing.
One broker who is becoming more optimistic on the outlook, is Morgans. It believes the company's shares are now trading on low earnings multiples, potentially creating an attractive entry point for patient investors.
The team at Morgans recently upgraded Treasury Wine Estates shares to an add rating with a $5.30 price target.
