Treasury Wine Estates (ASX:TWE) Reports A Sharp Earnings Reversal, Is It Still 20% Undervalued?

Treasury Wine Estates (ASX:TWE) has drawn investor attention after reporting full year 2026 earnings that showed sales of A$2,626 million and a net loss of A$1,077.8 million, compared with the prior year’s profit.

See our latest analysis for Treasury Wine Estates.

The sharp deterioration in Treasury Wine Estates’s 2026 earnings has come after a period where its 30 day share price return of 21.51% and 90 day share price return of 25.56% contrast with a 1 year total shareholder return that declined 27.98%. This hints at improving short term momentum after a weak longer term experience.

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Treasury Wine Estates shares have bounced in the past month even as the latest results show a large loss. Does it make more sense to act after this rebound, or to wait for a clearer entry based on valuation?

Most Popular Narrative: 20.1% Undervalued

Against the last close at A$5.65, the most followed narrative puts Treasury Wine Estates’ fair value at A$7.07, which points to a sizeable valuation gap based on earnings recovery and brand strength within the existing business.

At A$7.072 per share, Treasury Wine Estates (ASX: TWE) appears reasonably valued, although the assessment relies on earnings recovering during the second half of FY26. TWE reported first-half revenue of A$1.30 billion, EBITS of A$236.4 million and underlying earnings of 15.9 cents per share. Annualising these earnings gives a P/E ratio of approximately 22 times. Management expects second-half EBITS to exceed the first-half result and now forecasts FY26 EBITS in the range of A$480 to A$490 million.

Read the complete narrative.

According to Jamesiskindacool, this fair value leans heavily on how earnings, margins and EBITS evolve through FY26. Curious which specific profit assumptions sit behind that A$7.07 figure and how they treat the Penfolds strength versus US softness. The full narrative spells out those moving parts in detail.

Result: Fair Value of A$7.07 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, this Treasury Wine Estates narrative could be challenged if US wine demand remains weak, or if efforts to reduce the A$1.87b net debt underwhelm.

Find out about the key risks to this Treasury Wine Estates narrative.

Another View on Treasury Wine Estates Valuation

While the narrative fair value of A$7.07 suggests Treasury Wine Estates is 20.1% undervalued, the current P/S ratio of 1.7x sends a different signal. That is higher than the 1.2x fair ratio estimate and the 1.6x global beverage average. This points to less room for error if the recovery disappoints.

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mixed signals around Treasury Wine Estates leave you unsure, that is normal for this kind of earnings reset. Take a closer look at the underlying drivers and then weigh them against the 2 key rewards

Looking for more investment ideas beyond Treasury Wine Estates?

Do not stop with Treasury Wine Estates. Use this moment to widen your opportunity set with stocks that fit clear, disciplined criteria across quality, value and resilience.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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