Diageo (LSE:DGE) - Share price, News & Analysis

DGE fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	3/6
Past Performance	4/6
Financial Health	3/6
Dividends	5/6

DGE Stock Overview

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

Rewards

Trading at 28.8% below our estimate of its fair value

Earnings are forecast to grow 8.22% per year

Earnings grew by 170.9% over the past year

Pays a reliable dividend of 2.06%

Risk Analysis

Has a high level of debt

Diageo Competitors

C&C Group

LSE:CCR

UK£780.3m

Nestlé

SWX:NESN

CHF312.4b

LVMH Moët Hennessy - Louis Vuitton Société Européenne

ENXTPA:MC

€280.3b

Coca-Cola

NYSE:KO

US$264.4b

Price History & Performance

Summary of all time highs, changes and price drops for Diageo
Historical stock prices
Current Share Price	UK£35.98
52 Week High	UK£41.10
52 Week Low	UK£32.83
Beta	0.40
1 Month Change	-8.24%
3 Month Change	-1.65%
1 Year Change	6.53%
3 Year Change	7.45%
5 Year Change	53.96%
Change since IPO	948.98%

Recent News & Updates

May 18

Is Diageo (LON:DGE) A Risky Investment?

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

Mar 25

Diageo (LON:DGE) Has More To Do To Multiply In Value Going Forward

If you're looking for a multi-bagger, there's a few things to keep an eye out for. One common approach is to try and...

Shareholder Returns

	DGE	GB Beverage	GB Market
7D	-5.9%	-5.7%	-0.4%
1Y	6.5%	-0.4%	-3.9%

Return vs Industry: DGE exceeded the UK Beverage industry which returned -0.4% over the past year.

Return vs Market: DGE exceeded the UK Market which returned -3.9% over the past year.

Price Volatility

Is DGE's price volatile compared to industry and market?
DGE volatility
DGE Average Weekly Movement	4.7%
Beverage Industry Average Movement	5.9%
Market Average Movement	6.2%
10% most volatile stocks in GB Market	11.6%
10% least volatile stocks in GB Market	3.2%

Stable Share Price: DGE is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: DGE's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1886	27,783	Ivan Menezes	https://www.diageo.com

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, cachaca, and brandy, as well as beer, including cider and non-alcoholic products. It provides its products under the Johnnie Walker, Crown Royal, Bulleit and Buchanan's whiskies, Smirnoff, Cîroc and Ketel One vodkas, Casamigos, DeLeon and Don Julio tequilas, Captain Morgan, Baileys, Tanqueray, and Guinness brands.

Diageo Fundamentals Summary

How do Diageo's earnings and revenue compare to its market cap?
DGE fundamental statistics
Market Cap	UK£82.32b
Earnings (TTM)	UK£3.05b
Revenue (TTM)	UK£13.82b

27.0x

P/E Ratio

6.0x

P/S Ratio

Is DGE overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
DGE income statement (TTM)
Revenue	UK£13.82b
Cost of Revenue	UK£5.33b
Gross Profit	UK£8.48b
Other Expenses	UK£5.44b
Earnings	UK£3.05b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Jul 28, 2022

Earnings per share (EPS)	1.33
Gross Margin	61.41%
Net Profit Margin	22.04%
Debt/Equity Ratio	148.7%

How did DGE perform over the long term?

See historical performance and comparison

Dividends

2.1%

Current Dividend Yield

57%

Payout Ratio

Valuation

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

Valuation Score

2/6

Valuation Score 2/6

Below Fair Value
Significantly Below Fair Value
PE vs Industry
PE vs Market
PEG Ratio
PB vs Industry

28.8%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: DGE (£35.98) is trading below our estimate of fair value (£50.56)

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

Price To Earnings Ratio

PE vs Industry: DGE is poor value based on its PE Ratio (27x) compared to the UK Beverage industry average (26x).

PE vs Market: DGE is poor value based on its PE Ratio (27x) compared to the UK market (15.3x).

Price to Earnings Growth Ratio

PEG Ratio: DGE is poor value based on its PEG Ratio (3.3x)

Price to Book Ratio

PB vs Industry: DGE is overvalued based on its PB Ratio (10.7x) compared to the GB Beverage industry average (2.4x).

Future Growth

How is Diageo forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

8.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: DGE's forecast earnings growth (8.2% per year) is above the savings rate (0.9%).

Earnings vs Market: DGE's earnings (8.2% per year) are forecast to grow slower than the UK market (11.2% per year).

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

Revenue vs Market: DGE's revenue (6% per year) is forecast to grow faster than the UK market (4.1% per year).

High Growth Revenue: DGE's revenue (6% 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 (54%).

Past Performance

How has Diageo performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-5.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DGE has high quality earnings.

Growing Profit Margin: DGE's current net profit margins (22%) are higher than last year (9.8%).

Past Earnings Growth Analysis

Earnings Trend: DGE's earnings have declined by 5.8% per year over the past 5 years.

Accelerating Growth: DGE's earnings growth over the past year (170.9%) exceeds its 5-year average (-5.8% per year).

Earnings vs Industry: DGE earnings growth over the past year (170.9%) exceeded the Beverage industry 36.5%.

Return on Equity

High ROE: Whilst DGE's Return on Equity (34.57%) is high, this metric is skewed due to their high level of debt.

Financial Health

How is Diageo's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: DGE's short term assets (£11.6B) exceed its short term liabilities (£7.6B).

Long Term Liabilities: DGE's short term assets (£11.6B) do not cover its long term liabilities (£16.2B).

Debt to Equity History and Analysis

Debt Level: DGE's net debt to equity ratio (129.6%) is considered high.

Reducing Debt: DGE's debt to equity ratio has increased from 90.7% to 148.7% over the past 5 years.

Debt Coverage: DGE's debt is well covered by operating cash flow (26%).

Interest Coverage: DGE's interest payments on its debt are well covered by EBIT (13x coverage).

Balance Sheet

Dividend

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

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.05%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: DGE's dividend (2.06%) is higher than the bottom 25% of dividend payers in the UK market (1.8%).

High Dividend: DGE's dividend (2.06%) is low compared to the top 25% of dividend payers in the UK market (4.86%).

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.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (56.7%), DGE's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (59.5%), DGE's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

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

1.8yrs

Average management tenure

CEO

Ivan Menezes (62 yo)

8.83yrs

Tenure

UK£5,902,000

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 ($USD7.36M) is above average for companies of similar size in the UK market ($USD5.31M).

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

Leadership Team

Experienced Management: DGE's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.

Board Members

Experienced Board: DGE's board of directors are considered experienced (3 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.

Data	Last Updated (UTC time)
Company Analysis	2022/05/21 00:00
End of Day Share Price	2022/05/20 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30