LSE:DGE

Stock Analysis Report

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Executive Summary

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


Snowflake Analysis

Average dividend payer with limited growth.


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

-2.6%

DGE

-1.8%

GB Beverage

-1.0%

GB Market


1 Year Return

-15.5%

DGE

-15.8%

GB Beverage

-14.8%

GB Market

Return vs Industry: DGE matched the UK Beverage industry which returned -16% over the past year.

Return vs Market: DGE underperformed the UK Market which returned -14.5% over the past year.


Shareholder returns

DGEIndustryMarket
7 Day-2.6%-1.8%-1.0%
30 Day2.4%1.3%-1.6%
90 Day-5.4%-5.0%-3.6%
1 Year-13.4%-15.5%-13.7%-15.8%-11.6%-14.8%
3 Year10.1%2.5%6.7%-1.1%-8.9%-20.2%
5 Year60.2%41.2%60.9%41.2%16.2%-10.0%

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?

43.8x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: DGE (£26.31) is trading above our estimate of fair value (£17.38)

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 (43.8x) compared to the GB Beverage industry average (23.4x).

PE vs Market: DGE is poor value based on its PE Ratio (43.8x) compared to the UK market (18.3x).


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 22 analysts?

16.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DGE's forecast earnings growth (16.9% per year) is above the savings rate (1.2%).

Earnings vs Market: DGE's earnings (16.9% per year) are forecast to grow slower than the UK market (24.2% per year).

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

Revenue vs Market: DGE's revenue (4.2% per year) is forecast to grow slower than the UK market (6% per year).

High Growth Revenue: DGE's revenue (4.2% 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 very high in 3 years time (40.4%).


Next Steps

Past Performance

How has Diageo performed over the past 5 years?

2.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DGE has a large one-off loss of £1.4B impacting its June 30 2020 financial results.

Growing Profit Margin: DGE's current net profit margins (12%) are lower than last year (24.6%).


Past Earnings Growth Analysis

Earnings Trend: DGE's earnings have grown by 2.2% per year over the past 5 years.

Accelerating Growth: DGE's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: DGE had negative earnings growth (-55.4%) over the past year, making it difficult to compare to the Beverage industry average (-25%).


Return on Equity

High ROE: DGE's Return on Equity (17.2%) is considered low.


Next Steps

Financial Health

How is Diageo's financial position?


Financial Position Analysis

Short Term Liabilities: DGE's short term assets (£11.5B) exceed its short term liabilities (£6.5B).

Long Term Liabilities: DGE's short term assets (£11.5B) do not cover its long term liabilities (£18.4B).


Debt to Equity History and Analysis

Debt Level: DGE's debt to equity ratio (199%) is considered high.

Reducing Debt: DGE's debt to equity ratio has increased from 106.1% to 199% over the past 5 years.

Debt Coverage: DGE's debt is not well covered by operating cash flow (13.8%).

Interest Coverage: DGE's interest payments on its debt are well covered by EBIT (10.3x coverage).


Balance Sheet


Next Steps

Dividend

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

2.66%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: DGE's dividend (2.66%) is higher than the bottom 25% of dividend payers in the UK market (1.82%).

High Dividend: DGE's dividend (2.66%) is low compared to the top 25% of dividend payers in the UK market (5.36%).


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 high payout ratio (116.4%), DGE's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: DGE's dividends in 3 years are forecast to be covered by earnings (56.1% payout ratio).


Next Steps

Management

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

5.0yrs

Average management tenure


CEO

Ivan Menezes (61 yo)

7.25yrs

Tenure

UK£2,139,000

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 ($USD2.77M) is below average for companies of similar size in the UK market ($USD4.84M).

Compensation vs Earnings: Ivan's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Ivan Menezes
CEO & Executive Director7.25yrsUK£2.14m0.051%
£ 30.9m
Kathryn Mikells
CFO & Executive Director4.92yrsUK£1.37m0.0097%
£ 5.9m
Debra Crew
President of Diageo North America0.25yrUK£79.00k0%
£ 0
Yvonne Harrison
Corporate Information Officerno datano datano data
Vinod Rao
Group Treasurer & Head of Investor Relations1.67yrsno datano data
Siobhan Moriarty
General Counsel & Company Secretary7.25yrsno data0.0039%
£ 2.3m
Tom Day
Chief Sales Officerno datano datano data
Cristina Diezhandino
Chief Marketing Officer0.25yrno datano data
Mairéad Nayager
Chief HR Officer5yrsno datano data
John O'Keeffe
President of Diageo Africa13.25yrsno data0.0019%
£ 1.2m
John Kennedy
President of Diageo Europe9.33yrsno datano data
Galip Yorgancýoðlu
Managing Director of Turkeyno datano datano data

5.0yrs

Average Tenure

54yo

Average Age

Experienced Management: DGE's management team is seasoned and experienced (5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ivan Menezes
CEO & Executive Director7.25yrsUK£2.14m0.051%
£ 30.9m
Kathryn Mikells
CFO & Executive Director4.92yrsUK£1.37m0.0097%
£ 5.9m
Susan Kilsby
Senior Independent Director1yrUK£154.00k0.00011%
£ 67.0k
Francisco Javier Larraz
Independent Chairman3.75yrsUK£601.00k0.011%
£ 6.6m
Alan James Stewart
Independent Non-Executive Director6.08yrsUK£126.00k0.00030%
£ 182.8k
Melissa Bethell
Non-Executive Director0.33yrUK£377.00no data
John Manzoni
Non-Executive Directorno datano datano data
Nicola Mendelsohn
Independent Non-Executive Director6.08yrsUK£96.00k0.00022%
£ 134.1k
Ireena Vittal
Non-Executive Directorno datano datano data

4.9yrs

Average Tenure

60yo

Average Age

Experienced Board: DGE's board of directors are considered experienced (4.9 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: DGE insiders have sold more shares than they have bought 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£60.949b
  • Shares outstanding: 2.32b
  • 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)ADR EA REPR 4 ORD GBX28.935185USUSDMay 1990
DEO NBMV (Bolsa Mexicana de Valores)ADR EA REPR 4 ORD GBX28.935185MXMXNMay 1990
DGEDLSE (London Stock Exchange)ADR EA REPR 4 ORD GBX28.935185GBUSDMay 1990
GUIADB (Deutsche Boerse AG)ADR EA REPR 4 ORD GBX28.935185DEEURMay 1990
DEOBASE (Buenos Aires Stock Exchange)CEDEAR EACH REP 0.5 ADRARARSApr 2004

Biography

Diageo plc, together with its subsidiaries, produces, markets, and sells alcoholic beverages. The company offers scotch, whisky, gin, vodka, rum, ready to drink products, Irish cream liqueur, raki, liqueur ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/10/20 21:34
End of Day Share Price2020/10/20 00:00
Earnings2020/06/30
Annual Earnings2020/06/30


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.