Diageo plc

LSE:DGE Stock Report

Market Cap: UK£52.1b

Diageo Valuation

Is DGE undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

  • Below Fair Value

  • Significantly Below Fair Value

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

What is the Fair Price of DGE when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: DGE (£23.61) is trading below our estimate of fair value (£37.45)

Significantly Below Fair Value: DGE is trading below fair value by more than 20%.

Key Valuation Metric

Which metric is best to use when looking at relative valuation for DGE?

Key metric: As DGE is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for DGE. This is calculated by dividing DGE's market cap by their current earnings.
What is DGE's PE Ratio?
PE Ratio17.1x
EarningsUS$3.87b
Market CapUS$65.68b

Price to Earnings Ratio vs Peers

How does DGE's PE Ratio compare to its peers?

The above table shows the PE ratio for DGE vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average14.4x
IMB Imperial Brands
9.6x0.8%UK£20.0b
CCH Coca-Cola HBC
19x11.9%UK£10.0b
ABF Associated British Foods
11.1x4.2%UK£16.1b
000858 Wuliangye YibinLtd
17.9x8.8%CN¥579.6b
DGE Diageo
17.1x3.9%UK£52.5b

Price-To-Earnings vs Peers: DGE is expensive based on its Price-To-Earnings Ratio (17.1x) compared to the peer average (14.4x).

Price to Earnings Ratio vs Industry

How does DGE's PE Ratio compare vs other companies in the European Beverage Industry?

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
DGE 17.1xIndustry Avg. 17.4xNo. of Companies7PE01020304050+
0 CompaniesEstimated GrowthMarket Cap
No more companies

Price-To-Earnings vs Industry: DGE is good value based on its Price-To-Earnings Ratio (17.1x) compared to the European Beverage industry average (17.4x).

Price to Earnings Ratio vs Fair Ratio

What is DGE's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

DGE PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio17.1x
Fair PE Ratio20.7x

Price-To-Earnings vs Fair Ratio: DGE is good value based on its Price-To-Earnings Ratio (17.1x) compared to the estimated Fair Price-To-Earnings Ratio (20.7x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst DGE forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUK£23.61
UK£27.20
+15.2%
12.5%UK£33.90UK£20.86n/a22
Nov ’25UK£23.96
UK£26.92
+12.4%
13.0%UK£33.15UK£20.40n/a22
Oct ’25UK£26.16
UK£26.00
-0.6%
12.9%UK£31.96UK£19.67n/a22
Sep ’25UK£24.73
UK£26.10
+5.5%
14.1%UK£33.50UK£19.42n/a22
Aug ’25UK£24.00
UK£27.60
+15.0%
15.1%UK£34.73UK£20.13n/a22
Jul ’25UK£24.80
UK£29.50
+19.0%
11.6%UK£35.09UK£23.06n/a22
Jun ’25UK£26.31
UK£29.90
+13.7%
12.4%UK£35.67UK£23.23n/a22
May ’25UK£27.43
UK£30.45
+11.0%
12.4%UK£36.39UK£23.70n/a22
Apr ’25UK£29.26
UK£30.08
+2.8%
11.8%UK£35.48UK£23.83n/a22
Mar ’25UK£29.64
UK£30.82
+4.0%
13.1%UK£41.05UK£24.02n/a24
Feb ’25UK£29.05
UK£30.49
+5.0%
13.0%UK£40.65UK£23.65n/a24
Jan ’25UK£28.56
UK£32.09
+12.4%
13.6%UK£41.04UK£24.70n/a25
Dec ’24UK£28.16
UK£32.44
+15.2%
12.9%UK£40.78UK£24.49n/a25
Nov ’24UK£31.37
UK£37.08
+18.2%
12.1%UK£46.38UK£29.47UK£23.9625
Oct ’24UK£30.34
UK£37.54
+23.7%
11.7%UK£46.24UK£30.29UK£26.1624
Sep ’24UK£32.00
UK£37.58
+17.5%
10.0%UK£44.80UK£29.56UK£24.7324
Aug ’24UK£34.08
UK£37.40
+9.8%
11.3%UK£47.14UK£29.13UK£24.0023
Jul ’24UK£33.79
UK£37.86
+12.0%
11.7%UK£47.64UK£26.24UK£24.8023
Jun ’24UK£33.45
UK£39.43
+17.9%
12.5%UK£48.52UK£26.47UK£26.3123
May ’24UK£36.22
UK£39.75
+9.7%
12.4%UK£49.02UK£26.12UK£27.4323
Apr ’24UK£36.14
UK£40.02
+10.7%
12.8%UK£51.18UK£26.26UK£29.2623
Mar ’24UK£35.21
UK£41.07
+16.7%
12.8%UK£52.54UK£27.26UK£29.6425
Feb ’24UK£35.46
UK£40.19
+13.4%
13.2%UK£51.03UK£26.47UK£29.0525
Jan ’24UK£36.50
UK£42.33
+16.0%
13.0%UK£51.52UK£28.67UK£28.5625
Dec ’23UK£38.46
UK£40.59
+5.5%
12.9%UK£48.94UK£28.21UK£28.1625
Nov ’23UK£36.11
UK£42.56
+17.9%
12.9%UK£52.25UK£30.12UK£31.3725

Analyst Forecast: Target price is less than 20% higher than the current share price.

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