LSE:DGE

Stock Analysis Report

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Executive Summary

Diageo plc, together with its subsidiaries, produces, markets, and sells alcoholic beverages worldwide.


Snowflake Analysis

Established dividend payer with moderate growth potential.


Similar Companies

Share Price & News

How has Diageo's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: DGE has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.7%

DGE

3.6%

GB Beverage

1.8%

GB Market


1 Year Return

-12.0%

DGE

-14.8%

GB Beverage

-12.2%

GB Market

Return vs Industry: DGE exceeded the UK Beverage industry which returned -18.2% over the past year.

Return vs Market: DGE exceeded the UK Market which returned -14.4% over the past year.


Shareholder returns

DGEIndustryMarket
7 Day2.7%3.6%1.8%
30 Day7.1%6.4%6.5%
90 Day3.5%0.3%-9.9%
1 Year-10.0%-12.0%-12.4%-14.8%-8.0%-12.2%
3 Year34.6%25.4%28.1%18.9%-5.6%-17.2%
5 Year85.1%62.5%81.6%59.1%11.2%-13.7%

Price Volatility Vs. Market

How volatile is Diageo's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Diageo undervalued compared to its fair value and its price relative to the market?

22.73x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: DGE (£29.19) is trading above our estimate of fair value (£23.86)

Significantly Below Fair Value: DGE is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: DGE is poor value based on its PE Ratio (22.7x) compared to the Beverage industry average (18.8x).

PE vs Market: DGE is poor value based on its PE Ratio (22.7x) compared to the UK market (14.1x).


Price to Earnings Growth Ratio

PEG Ratio: DGE is poor value based on its PEG Ratio (2.6x)


Price to Book Ratio

PB vs Industry: DGE is overvalued based on its PB Ratio (9.1x) compared to the GB Beverage industry average (2.8x).


Next Steps

Future Growth

How is Diageo forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

8.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DGE's forecast earnings growth (8.8% per year) is above the savings rate (1.2%).

Earnings vs Market: DGE's earnings (8.8% per year) are forecast to grow slower than the UK market (20.1% per year).

High Growth Earnings: DGE's earnings are forecast to grow, but not significantly.

Revenue vs Market: DGE's revenue (5.1% per year) is forecast to grow faster than the UK market (3.7% per year).

High Growth Revenue: DGE's revenue (5.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DGE's Return on Equity is forecast to be high in 3 years time (37.4%)


Next Steps

Past Performance

How has Diageo performed over the past 5 years?

8.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DGE has high quality earnings.

Growing Profit Margin: DGE's current net profit margins (23.2%) are lower than last year (23.4%).


Past Earnings Growth Analysis

Earnings Trend: DGE's earnings have grown by 8.4% per year over the past 5 years.

Accelerating Growth: DGE's earnings growth over the past year (3.7%) is below its 5-year average (8.4% per year).

Earnings vs Industry: DGE earnings growth over the past year (3.7%) exceeded the Beverage industry -0.8%.


Return on Equity

High ROE: Whilst DGE's Return on Equity (34.71%) is high, this metric is skewed due to their high level of debt.


Next Steps

Financial Health

How is Diageo's financial position?


Financial Position Analysis

Short Term Liabilities: DGE's short term assets (£10.2B) exceed its short term liabilities (£8.9B).

Long Term Liabilities: DGE's short term assets (£10.2B) do not cover its long term liabilities (£13.7B).


Debt to Equity History and Analysis

Debt Level: DGE's debt to equity ratio (146%) is considered high.

Reducing Debt: DGE's debt to equity ratio has increased from 127.3% to 146% over the past 5 years.

Debt Coverage: DGE's debt is well covered by operating cash flow (21.8%).

Interest Coverage: DGE's interest payments on its debt are well covered by EBIT (16.1x coverage).


Balance Sheet


Next Steps

Dividend

What is Diageo's current dividend yield, its reliability and sustainability?

2.35%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: DGE's dividend (2.35%) is higher than the bottom 25% of dividend payers in the UK market (2.04%).

High Dividend: DGE's dividend (2.35%) is low compared to the top 25% of dividend payers in the UK market (5.86%).


Stability and Growth of Payments

Stable Dividend: DGE's dividends per share have been stable in the past 10 years.

Growing Dividend: DGE's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (54.4%), DGE's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: DGE's dividends in 3 years are forecast to be covered by earnings (53.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

6.8yrs

Average management tenure


CEO

Ivan Menezes (60yo)

6.83yrs

Tenure

UK£11,654,000

Compensation

Mr. Ivan M. Menezes has been the Chief Executive Officer at Diageo PLC since July 1, 2013. Mr. Menezes served as the Chief Operating Officer of Diageo PLC from March 1, 2012 to July 1, 2013. He served as C ...


CEO Compensation Analysis

Compensation vs Market: Ivan's total compensation ($USD14.39M) is above average for companies of similar size in the UK market ($USD4.52M).

Compensation vs Earnings: Ivan's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Ivan Menezes
CEO & Executive Director6.83yrsUK£11.65m0.050% £34.1m
Kathryn Mikells
CFO & Executive Director4.5yrsUK£7.03m0.0096% £6.5m
Yvonne Harrison
Corporate Information Officerno datano datano data
Vinod Rao
Group Treasurer & Head of Investor Relations1.25yrsno datano data
Siobhan Moriarty
General Counsel & Company Secretary6.83yrsno data0.0032% £2.2m
Syl Saller
Chief Marketing Officer6.83yrsno data0.0037% £2.5m
Tom Day
Chief Sales Officerno datano datano data
Mairéad Nayager
Chief HR Officer4.58yrsno datano data
John Kennedy
President of Diageo Europe8.92yrsno data0.0051% £3.5m
Galip Yorgancýoðlu
Managing Director of Turkeyno datano datano data

6.8yrs

Average Tenure

56yo

Average Age

Experienced Management: DGE's management team is seasoned and experienced (6.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ivan Menezes
CEO & Executive Director6.83yrsUK£11.65m0.050% £34.1m
Kathryn Mikells
CFO & Executive Director4.5yrsUK£7.03m0.0096% £6.5m
Susan Kilsby
Senior Independent Director0.58yrUK£111.00k0.00011% £74.9k
Javier Ferrán
Independent Chairman3.33yrsUK£601.00k0.011% £7.3m
Evan Davies
Non-Executive Director9.67yrsUK£135.00k0.00022% £149.8k
KwonPing Ho
Non-Executive Director7.58yrsUK£94.00k0.00019% £129.4k
Alan James Stewart
Independent Non-Executive Director5.67yrsUK£123.00k0.00030% £204.3k
Nicola Mendelsohn
Non-Executive Director5.67yrsUK£93.00k0.00021% £143.0k

5.7yrs

Average Tenure

60.5yo

Average Age

Experienced Board: DGE's board of directors are considered experienced (5.7 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: DGE insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Diageo plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Diageo plc
  • Ticker: DGE
  • Exchange: LSE
  • Founded: 1886
  • Industry: Distillers and Vintners
  • Sector: Food, Beverage & Tobacco
  • Market Cap: UK£68.096b
  • Shares outstanding: 2.33b
  • Website: https://www.diageo.com

Number of Employees


Location

  • Diageo plc
  • Lakeside Drive
  • Park Royal
  • London
  • Greater London
  • NW10 7HQ
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DGEA.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1980
DGELSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1980
DGEENXTPA (Euronext Paris)YesOrdinary SharesFREURJan 1980
GUIDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1980
DGELBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1980
DGEPBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBEURJan 1980
GUIXTRA (XETRA Trading Platform)YesOrdinary SharesDEEURJan 1980
DEONYSE (New York Stock Exchange)SPON ADR NEWUSUSDMay 1990
DEO NBMV (Bolsa Mexicana de Valores)SPON ADR NEWMXMXNMay 1990
DGEDLSE (London Stock Exchange)SPON ADR NEWGBUSDMay 1990
GUIADB (Deutsche Boerse AG)SPON ADR NEWDEEURMay 1990

Biography

Diageo plc, together with its subsidiaries, produces, markets, and sells alcoholic beverages worldwide. The company offers scotch, whisky, gin, vodka, rum, ready to drink products, Irish cream liqueur, raki, liqueur, wine, tequila, Canadian whisky, American whiskey, adult beverages, cachaça, and brandy, as well as beer, including cider and non-alcoholic products. It provides its products primarily under the Johnnie Walker, Smirnoff, Baileys, Captain Morgan, Tanqueray, and Guinness brands. The company also offers its products under the Crown Royal, Yenì Raki, Shui Jing Fang, Johnnie Walker Blue Label, Bulleit Bourbon, Don Julio, Buchanan’s, J?B, Grand Old Parr, Tanqueray No. TEN, Ron Zacapa Centenario XO, Casamigos, Bundaberg, McDowell’s No. 1, Ypióca, Lagavulin, The Singleton of Glen Ord, Johnnie Walker Gold Label Reserve, Windsor, Black&White, Cîroc, Ketel One vodka, and Talisker brands. It has operations in North America, Europe, Turkey, Africa, Latin America, the Caribbean, the Asia Pacific, and internationally. The company was founded in 1886 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/05/27 20:48
End of Day Share Price2020/05/27 00:00
Earnings2019/12/31
Annual Earnings2019/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.