Treasury Wine Estates is under Algo Engine sell conditions following a lower high formation at $17.50.
Earnings continue to grow at 15 – 20%, although there is evidence that the growth rate is slowing. If we assume total revenue in FY20 of $3bn on EBIT of $765mn, 15% earnings per share growth, we can support a 3% dividend yield.
You're not a member! Trial today
On the above basis, we consider TWE fair value, but see little in the way of a catalyst to drive the share price higher. We therefore, recommend selling a covered call option to enhance the income return.
