Australian Vintage earnings set to increase
19/04/16 closing share price: 0.580
52 week high: 0.595 52 week low: 0.300 Most recent dividend: - Annual dividend yield: - Franking: -
Australian Vintage Limited is an Australian wine company, championing a fully-integrated wine business model. The breadth of Australian Vintage Limited extends to vineyards, boutique and bulk wine production, packaging, marketing and distribution.
We expect Australian Vintage's share price to undergo a period of consolidation following the recent strong gains, however remain of the view that the shares still offer material upside over the medium-term. This is based on our belief that Australian Vintage's earnings are set to increase significantly over the next several years in response to a combination of management's optimisation (i.e. productivity) and growth (i.e. new markets) initiatives and the lower Australian dollar.
With Australian Vintage's shares currently trading at 16.6 times the mid-point of management's earnings guidance for FY16, and with the company's mid-cycle earnings likely to be materially higher than the current run rate, we continue to rate the stock as a high risk Buy.
James Lennon is a senior analyst at investment research and funds management house Fat Prophets.