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, although management expects second-half EBITS to exceed the first-half result and now forecasts FY26 EBITS of A$480–490 million.
Penfolds remains the strongest part of the business, with China sales to consumers increasing by 17.2%, but weaker US wine demand and distribution disruption reduced group earnings. Net debt was A$1.87 billion and leverage was 2.4 times, leading TWE to suspend its FY26 interim dividend while it focuses on reducing debt and improving cash generation.
This assessment is based mainly on TWE’s existing brands and current FY26 guidance. It does not rely significantly on the full A$100 million annual cost-reduction target, a major recovery in the US wine market or stronger future Penfolds growth. These may provide additional upside, but remain subject to consumer demand, customer inventory levels, debt reduction, currency movements and execution of the company’s restructuring plans.
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