DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:DEO - US25243Q2057 - ADR
91.18 USD
+0.3 (+0.33%)
91.18 USD
0 (0%)
Overall DEO gets a fundamental rating of 5 out of 10. We evaluated DEO against 33 industry peers in the Beverages industry. DEO has a medium profitability rating, but doesn't score so well on its financial health evaluation. DEO has a decent growth rate and is not valued too expensively.
1. Profitability
1.1 Basic Checks
- In the past year DEO was profitable.
- DEO had a positive operating cash flow in the past year.
- In the past 5 years DEO has always been profitable.
- Each year in the past 5 years DEO had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 4.77%, DEO is in line with its industry, outperforming 51.52% of the companies in the same industry.
- DEO has a Return On Equity of 21.23%. This is in the better half of the industry: DEO outperforms 72.73% of its industry peers.
- Looking at the Return On Invested Capital, with a value of 8.31%, DEO is in line with its industry, outperforming 57.58% of the companies in the same industry.
- DEO had an Average Return On Invested Capital over the past 3 years of 11.21%. This is in line with the industry average of 11.45%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.77% | ||
| ROE | 21.23% | ||
| ROIC | 8.31% |
ROA(3y)7.73%
ROA(5y)8.08%
ROE(3y)34.97%
ROE(5y)37.03%
ROIC(3y)11.21%
ROIC(5y)11.47%
1.3 Margins
- DEO's Profit Margin of 11.63% is fine compared to the rest of the industry. DEO outperforms 72.73% of its industry peers.
- DEO's Profit Margin has been stable in the last couple of years.
- Looking at the Operating Margin, with a value of 21.41%, DEO is in the better half of the industry, outperforming 75.76% of the companies in the same industry.
- DEO's Operating Margin has declined in the last couple of years.
- DEO has a better Gross Margin (60.13%) than 87.88% of its industry peers.
- DEO's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 21.41% | ||
| PM (TTM) | 11.63% | ||
| GM | 60.13% |
OM growth 3Y-11.65%
OM growth 5Y-6.79%
PM growth 3Y-17.92%
PM growth 5Y-0.61%
GM growth 3Y-0.67%
GM growth 5Y-0.09%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so DEO is still creating some value.
- DEO has about the same amout of shares outstanding than it did 1 year ago.
- Compared to 5 years ago, DEO has less shares outstanding
- DEO has a worse debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 2.07 indicates that DEO is not a great score, but indicates only limited risk for bankruptcy at the moment.
- Looking at the Altman-Z score, with a value of 2.07, DEO is in line with its industry, outperforming 51.52% of the companies in the same industry.
- DEO has a debt to FCF ratio of 8.78. This is a slightly negative value and a sign of low solvency as DEO would need 8.78 years to pay back of all of its debts.
- DEO has a Debt to FCF ratio (8.78) which is in line with its industry peers.
- DEO has a Debt/Equity ratio of 1.88. This is a high value indicating a heavy dependency on external financing.
- The Debt to Equity ratio of DEO (1.88) is worse than 87.88% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 8.78 | ||
| Altman-Z | 2.07 |
ROIC/WACC1.13
WACC7.37%
2.3 Liquidity
- A Current Ratio of 1.63 indicates that DEO should not have too much problems paying its short term obligations.
- Looking at the Current ratio, with a value of 1.63, DEO is in the better half of the industry, outperforming 60.61% of the companies in the same industry.
- DEO has a Quick Ratio of 1.63. This is a bad value and indicates that DEO is not financially healthy enough and could expect problems in meeting its short term obligations.
- DEO's Quick ratio of 0.64 is on the low side compared to the rest of the industry. DEO is outperformed by 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.63 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
- DEO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -8.65%.
- The Earnings Per Share has been growing slightly by 3.59% on average over the past years.
- Looking at the last year, DEO shows a decrease in Revenue. The Revenue has decreased by -0.12% in the last year.
- DEO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 11.49% yearly.
EPS 1Y (TTM)-8.65%
EPS 3Y-6.76%
EPS 5Y3.59%
EPS Q2Q%-7.14%
Revenue 1Y (TTM)-0.12%
Revenue growth 3Y-1.08%
Revenue growth 5Y11.49%
Sales Q2Q%-3.34%
3.2 Future
- The Earnings Per Share is expected to grow by 6.84% on average over the next years.
- The Revenue is expected to grow by 2.42% on average over the next years.
EPS Next Y2.98%
EPS Next 2Y4.21%
EPS Next 3Y5%
EPS Next 5Y6.84%
Revenue Next Year-3.03%
Revenue Next 2Y0.1%
Revenue Next 3Y1.32%
Revenue Next 5Y2.42%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- With a Price/Earnings ratio of 13.90, DEO is valued correctly.
- Based on the Price/Earnings ratio, DEO is valued a bit cheaper than 75.76% of the companies in the same industry.
- When comparing the Price/Earnings ratio of DEO to the average of the S&P500 Index (27.32), we can say DEO is valued slightly cheaper.
- Based on the Price/Forward Earnings ratio of 13.49, the valuation of DEO can be described as correct.
- DEO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. DEO is cheaper than 78.79% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of DEO to the average of the S&P500 Index (24.32), we can say DEO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.9 | ||
| Fwd PE | 13.49 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, DEO is valued a bit cheaper than the industry average as 63.64% of the companies are valued more expensively.
- 72.73% of the companies in the same industry are more expensive than DEO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.73 | ||
| EV/EBITDA | 11.73 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates DEO does not grow enough to justify the current Price/Earnings ratio.
- The decent profitability rating of DEO may justify a higher PE ratio.
PEG (NY)4.67
PEG (5Y)3.88
EPS Next 2Y4.21%
EPS Next 3Y5%
5. Dividend
5.1 Amount
- DEO has a Yearly Dividend Yield of 4.73%, which is a nice return.
- DEO's Dividend Yield is rather good when compared to the industry average which is at 1.73. DEO pays more dividend than 96.97% of the companies in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.83, DEO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.73% |
5.2 History
- On average, the dividend of DEO grows each year by 8.14%, which is quite nice.
- DEO has been paying a dividend for at least 10 years, so it has a reliable track record.
- DEO has decreased its dividend in the last 3 years.
Dividend Growth(5Y)8.14%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
- 97.62% of the earnings are spent on dividend by DEO. This is not a sustainable payout ratio.
- DEO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP97.62%
EPS Next 2Y4.21%
EPS Next 3Y5%
DIAGEO PLC-SPONSORED ADR / DEO FAQ
What is the fundamental rating for DEO stock?
ChartMill assigns a fundamental rating of 5 / 10 to DEO.
Can you provide the valuation status for DIAGEO PLC-SPONSORED ADR?
ChartMill assigns a valuation rating of 5 / 10 to DIAGEO PLC-SPONSORED ADR (DEO). This can be considered as Fairly Valued.
Can you provide the profitability details for DIAGEO PLC-SPONSORED ADR?
DIAGEO PLC-SPONSORED ADR (DEO) has a profitability rating of 6 / 10.
How financially healthy is DIAGEO PLC-SPONSORED ADR?
The financial health rating of DIAGEO PLC-SPONSORED ADR (DEO) is 3 / 10.
Is the dividend of DIAGEO PLC-SPONSORED ADR sustainable?
The dividend rating of DIAGEO PLC-SPONSORED ADR (DEO) is 6 / 10 and the dividend payout ratio is 97.62%.