LSE:DGE

Stock Analysis Report

Executive Summary

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

Snowflake

Fundamentals

Established dividend payer with proven track record.


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


Market Performance


7 Day Return

-2.9%

DGE

-2.9%

GB Beverage

-0.4%

GB Market


1 Year Return

15.4%

DGE

12.1%

GB Beverage

2.9%

GB Market

Return vs Industry: DGE exceeded the UK Beverage industry which returned 12.1% over the past year.

Return vs Market: DGE exceeded the UK Market which returned 2.9% over the past year.


Shareholder returns

DGEIndustryMarket
7 Day-2.9%-2.9%-0.4%
30 Day-3.3%-3.8%-1.4%
90 Day-7.8%-7.5%-2.1%
1 Year17.9%15.4%15.2%12.1%8.0%2.9%
3 Year53.7%43.1%54.6%43.4%18.0%3.6%
5 Year100.7%75.9%98.3%73.3%35.8%6.4%

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?

23.85x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: DGE (£31.17) is trading above our estimate of fair value (£27.16)

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 (23.8x) compared to the Beverage industry average (23.7x).

PE vs Market: DGE is poor value based on its PE Ratio (23.8x) compared to the UK market (16.8x).


Price to Earnings Growth Ratio

PEG Ratio: DGE is poor value based on its PEG Ratio (4.2x)


Price to Book Ratio

PB vs Industry: DGE is overvalued based on its PB Ratio (8.8x) compared to the GB Beverage industry average (3.6x).


Next Steps

Future Growth

How is Diageo forecast to perform in the next 1 to 3 years based on estimates from 22 analysts?

5.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DGE's forecast earnings growth (5.7% per year) is above the savings rate (1.2%).

Earnings vs Market: DGE's earnings (5.7% per year) are forecast to grow slower than the UK market (12.6% per year).

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

Revenue vs Market: DGE's revenue (5.3% per year) is forecast to grow faster than the UK market (3.9% per year).

High Growth Revenue: DGE's revenue (5.3% 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 (46.5%).


Next Steps

Past Performance

How has Diageo performed over the past 5 years?

8.6%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: DGE's earnings have grown by 8.6% per year over the past 5 years.

Accelerating Growth: DGE's earnings growth over the past year (4.6%) is below its 5-year average (8.6% per year).

Earnings vs Industry: DGE earnings growth over the past year (4.6%) exceeded the Beverage industry 3.2%.


Return on Equity

High ROE: Whilst DGE's Return on Equity (32.86%) is high, this metric is skewed due to their high level of debt.


Return on Assets

ROA vs Industry: DGE has a higher Return on Assets than the Beverage industry average last year.


Return on Capital Employed

ROCE Improving: DGE has significantly improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Diageo's financial position?


Financial Position Analysis

Short Term Liabilities: DGE's short term assets (£9.4B) exceeds its short term liabilities (£7.0B)

Long Term Liabilities: DGE's short term assets (9.4B) do not cover its long term liabilities (14.1B)


Debt to Equity History and Analysis

Debt Level: DGE's debt to equity ratio (123.7%) is considered high

Reducing Debt: DGE's debt to equity ratio has increased from 121.5% to 123.7% over the past 5 years.

Debt Coverage: DGE's debt is well covered by operating cash flow (25.8%).

Interest Coverage: DGE's interest payments on its debt are well covered by EBIT (17.8x coverage).


Balance Sheet

Inventory Level: DGE has a high level of physical assets or inventory.

Debt Coverage by Assets: DGE's debt is not covered by short term assets (assets are 0.7x debt).


Next Steps

Dividend

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

2.20%

Current Dividend Yield


Dividend Yield vs Market

company2.2%marketbottom25%2.0%markettop25%5.4%industryaverage2.2%forecastin3Years2.5%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: DGE's dividend (2.2%) is higher than the bottom 25% of dividend payers in the UK market (2.01%).

High Dividend: DGE's dividend (2.2%) is low compared to the top 25% of dividend payers in the UK market (5.36%).

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 (52.5%), 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 well covered by earnings (49.7% payout ratio).


Next Steps

Management

What is the CEO of Diageo's salary, the management and board of directors tenure and is there insider trading?

6.3yrs

Average management tenure


CEO

Ivan Menezes (60yo)

6.3yrs

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 ($USD15.00M) is about average for companies of similar size in the UK market ($USD4.92M).

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


Management Age and Tenure

6.3yrs

Average Tenure

56yo

Average Age

Experienced Management: DGE's management team is seasoned and experienced (6.3 years average tenure).


Board Age and Tenure

5.1yrs

Average Tenure

60yo

Average Age

Experienced Board: DGE's board of directors are considered experienced (5.1 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyUK£8,26910 Oct 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares249
Max PriceUK£33.21
BuyUK£8,25710 Sep 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares245
Max PriceUK£33.70
BuyUK£8,27912 Aug 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares243
Max PriceUK£34.07
BuyUK£985,35029 Jul 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares30,000
Max PriceUK£32.85
BuyUK£8,28610 Jul 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares243
Max PriceUK£34.10
BuyUK£8,27110 Jun 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares243
Max PriceUK£34.04
SellUK£482,38228 May 19
John O'Keeffe
EntityIndividual
Shares14,421
Max PriceUK£33.45
SellUK£128,00009 May 19
Samuel Fischer
EntityIndividual
Shares4,000
Max PriceUK£32.00
BuyUK£8,26511 Mar 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares270
Max PriceUK£30.61
BuyUK£8,27511 Feb 19
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares275
Max PriceUK£30.09
BuyUK£8,26710 Dec 18
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares296
Max PriceUK£27.93
BuyUK£8,28613 Nov 18
Javier Ferrán
EntityIndividual
Role
Chairman of the Board
Chairman
Shares302
Max PriceUK£27.44

Ownership Breakdown


Management Team

  • Ivan Menezes (60yo)

    CEO & Executive Director

    • Tenure: 6.3yrs
    • Compensation: UK£11.65m
  • Kathryn Mikells (53yo)

    CFO & Executive Director

    • Tenure: 3.9yrs
    • Compensation: UK£7.03m
  • Syl Saller (62yo)

    Chief Marketing Officer

    • Tenure: 6.3yrs
  • Galip Yorgancýoðlu

    Managing Director of Turkey

    • Tenure: 0yrs
  • Yvonne Harrison

    Corporate Information Officer

    • Tenure: 0yrs
  • John Kennedy (54yo)

    President of Europe

    • Tenure: 8.3yrs
  • Siobhan Moriarty (57yo)

    General Counsel & Company Secretary

    • Tenure: 6.3yrs
  • Vinod Rao (56yo)

    Group Treasurer & Head of Investor Relations

    • Tenure: 0.7yrs
  • Tom Day

    Chief Sales Officer

    • Tenure: 0yrs
  • Mairéad Nayager (44yo)

    Chief HR Officer

    • Tenure: 4yrs

Board Members

  • Ivan Menezes (60yo)

    CEO & Executive Director

    • Tenure: 6.3yrs
    • Compensation: UK£11.65m
  • Susan Kilsby (61yo)

    Non-Executive Director

    • Tenure: 1.5yrs
    • Compensation: UK£111.00k
  • Javier Ferrán (62yo)

    Chairman

    • Tenure: 2.8yrs
    • Compensation: UK£601.00k
  • Mark Davies (67yo)

    Senior Non-Executive Director

    • Tenure: 8yrs
    • Compensation: UK£135.00k
  • Kathryn Mikells (53yo)

    CFO & Executive Director

    • Tenure: 3.9yrs
    • Compensation: UK£7.03m
  • KwonPing Ho (66yo)

    Non-Executive Director

    • Tenure: 7yrs
    • Compensation: UK£94.00k
  • Alan James Stewart (59yo)

    Non-Executive Director

    • Tenure: 5.1yrs
    • Compensation: UK£123.00k
  • Nicola Mendelsohn (47yo)

    Non-Executive Director

    • Tenure: 5.1yrs
    • Compensation: UK£93.00k
  • Debra Crew (48yo)

    Non-Executive Director

    • Tenure: 0.5yrs
    • Compensation: UK£19.00k

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£73.217b
  • Shares outstanding: 2.35b
  • 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
GUIXTRA (XETRA Trading Platform)YesOrdinary SharesDEEURJan 1980
DGELSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1980
DGEENXTPA (Euronext Paris)YesOrdinary SharesFREURJan 1980
DGEA.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 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
DEO NBMV (Bolsa Mexicana de Valores)ADR EA REPR 4 ORD GBX28.935185MXMXNMay 1990
DEONYSE (New York Stock Exchange)ADR EA REPR 4 ORD GBX28.935185USUSDMay 1990
GUIADB (Deutsche Boerse AG)ADR EA REPR 4 ORD GBX28.935185DEEURMay 1990
DGEDLSE (London Stock Exchange)ADR EA REPR 4 ORD GBX28.935185GBUSDMay 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, rak ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/20 20:36
End of Day Share Price2019/10/18 00:00
Earnings2019/06/30
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.