Why Treasury Wine shares are rising today

The Treasury Wine Estates Ltd (ASX: TWE) share price is higher on Tuesday after the company released a market update.

At the time of writing, the Treasury Wine share price is up 6.38% to $5.50. That move offers some short-term relief, but it comes against a sobering backdrop. The stock is still down roughly 50% over the past year after this month’s brutal sell-off.

Let’s take a closer look at the release.

A long-running US issue finally resolved

In a statement to the ASX, Treasury Wine said it has reached a settlement with Republic National Distributing Company (RNDC) in California. The agreement follows RNDC’s decision to exit the California market last year.

Under the agreement, Treasury Wine will repurchase its Treasury Americas portfolio inventory held by RNDC in California at original sale value. While the financial terms of the settlement are confidential, management said the agreement compensates the group for the disruption caused by RNDC’s withdrawal.

Treasury expects the net cash outflow related to this settlement in the first half of FY26 to be around US$65 million. That figure already factors in the expected resale of the inventory to other customers.

Earnings guidance edges higher

Alongside the settlement update, Treasury Wine provided fresh earnings guidance.

The company now expects first-half FY26 EBITS of approximately $236 million. That compares favourably with its previous guidance range of $225 million to $235 million issued in December.

While the upgrade is modest, it indicates conditions are tracking better than some investors had feared.

Management also confirmed the settlement does not change plans to gradually reduce distributor inventory levels in California over the next two years, a process already flagged to the market.

The US business is stabilising

Treasury Wine will continue working with RNDC across other US markets and highlighted that RNDC remains a committed distribution partner outside California.

Notably, Treasury Americas depletions in RNDC-distributed states grew 2.7% in the first half. That indicates demand for the company’s portfolio remains relatively resilient, despite wider pressure across the US wine market.

The company will provide more details when it releases its interim results on 16 February.

A bounce after heavy selling

The positive update has lifted the shares in early trade, but the move follows an extended period of weakness.

Treasury Wine’s shares have been in a steady downtrend for months, weighed down by softer US demand, margin pressure, and investor concerns around inventory levels.

From a technical perspective, the stock remains well below its levels from early last year. As a result, many investors are likely waiting for clearer evidence of a sustained turnaround before becoming more confident.

Foolish Takeaway

Today’s update removes a key operational overhang, but it does not change the broader challenges facing the business.

After a steep decline over the past year, Treasury Wine’s upcoming results will show whether recent US stabilisation can support a sustained recovery.

The post Why Treasury Wine shares are rising today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.