Stock Analysis & Ideas

Why Are Investor Sentiments High for Duckhorn Portfolio?

Story Highlights

Duckhorn Portfolio’s solid fundamentals and favorable operating conditions in the industry are appealing. It will be interesting to explore more about this luxury winemaker.

The Duckhorn Portfolio, Inc. (NYSE: NAPA) is among the few companies that come into the minds of wine lovers, especially if they prefer luxury or ultra-luxury wines. Popular brands offered by the company include Decoy, Paraduxx, Canvasback, and others.

Headquartered in Saint Helena, CA, the $2.3-billion company has been serving wines since its inception in 1976. It has an extensive presence in the United States and operations in at least 50 countries across the globe.

Apart from wine lovers, Duckhorn has won the hearts of many analysts as well. Per TipRanks, the company presently has a Strong Buy consensus rating based on four Buys and one Hold. The company scores an eight out of 10 on TipRanks, indicating that its stock has the potential to outperform the market.

Duckhorn’s price target is pegged at $23.40, mirroring an upside potential of 19.08% from current levels. The lowest to highest price band is $20-$26 per share. Over the past year, shares of Duckhorn have increased 3.3%.

Now, let’s understand why Duckhorn is loved so much.

Sound Financial Results

Duckhorn delivered upbeat earnings in the last four quarters. In the last quarter, the company’s earnings surprise was 13.3%. Also, revenues exceeded the consensus estimate by 6.4% in the second quarter of Fiscal 2022 (ended January 31, 2022).

Net sales in the quarter expanded 18% year-over-year, while earnings were in line with the year-ago tally. Volumes in the quarter increased 24.8%, and the price had an adverse impact of 6.8%.

Growth Boosters

Duckhorn is well-positioned to leverage a solid portfolio of luxury wines, a strong brand image, and a reliable leadership team. It has healthy sales and distribution channels. The company wholesales nearly 80% of its products to retailers. Also, it is working on strengthening its direct-to-consumers sales channel.

On the supply side, sourcing fruits mainly from third parties and executing the majority of production at the company-operated wineries are advantageous.

According to a Statista report, global wine sales are forecast to be $365.7 billion in 2022, while a 7.21% GAGR is expected from 2022 to 2025. Wine sales in the United States are expected to be $58.13 billion in 2022.

In March 2022, the company’s President, CEO, and Chairman, Alex Ryan, said, “We believe that our brand power, differentiated strategic plan and highly flexible supply chain well positions us to sustain momentum in 2022 and deliver profitable growth for years to come.”

Well Placed for Q3

Duckhorn is scheduled to report its results for the third quarter of Fiscal 2022 (ended April 30, 2022) on June 2, after the market closes. The consensus estimate for the company’s earnings is $0.13 per share. Further, analysts expect the company to report revenues of $84.8 million.

In the quarter, the company might have benefited from strength in off-premise and on-premise business. Also, its efforts to boost its sales and add new wines to its product offerings might get reflected in the top-line results. Further, the company’s growth boosters might have aided the results.

On the flip side, higher costs of sales and operating expenses might have impacted results in the third quarter.

The company has not provided any specific projections for the third quarter, but upwardly revised projections for the full year are reflective of healthy expectations for the quarter as well.

In March, the company raised its Fiscal 2022 (ending July 31, 2022) earnings guidance to $0.55-$0.58 per share from 0.54-$0.57 per share anticipated earlier. Revenues are expected to be within the $364 million to $369 million range, up from the earlier guidance of $353 million to $360 million.

Positive Sentiments

On May 31, 2022, Andrea Teixeira of J.P. Morgan maintained a buy rating on NAPA with a price target of $23 (17.05% upside potential). The analyst opines that the company’s customer base is the higher income group and its “high brand equity” should be beneficial.

Also, the financial bloggers on TipRanks are 100% Bullish on NAPA, as compared with the sector average of 66%.


A large addressable market, solid product offerings, and healthy demand for luxury wines have added new vigor to Duckhorn’s investment appeal. Considering its tailwinds, gaining exposure to the stock might be beneficial at current levels.

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