DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
NYSE:DEO - New York Stock Exchange, Inc. - US25243Q2057 - ADR - Currency: USD
Overall DEO gets a fundamental rating of 5 out of 10. We evaluated DEO against 32 industry peers in the Beverages industry. DEO scores excellent on profitability, but there are concerns on its financial health. DEO has a valuation in line with the averages, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year DEO was profitable.
DEO had a positive operating cash flow in the past year.
Each year in the past 5 years DEO has been profitable.
DEO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
DEO's Return On Assets of 7.66% is fine compared to the rest of the industry. DEO outperforms 62.07% of its industry peers.
DEO has a Return On Equity of 34.96%. This is amongst the best in the industry. DEO outperforms 86.21% of its industry peers.
DEO has a better Return On Invested Capital (12.39%) than 65.52% of its industry peers.
DEO had an Average Return On Invested Capital over the past 3 years of 13.30%. This is in line with the industry average of 13.22%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.66% | ||
| ROE | 34.96% | ||
| ROIC | 12.39% |
ROA(3y)9.1%
ROA(5y)7.97%
ROE(3y)41.78%
ROE(5y)36.94%
ROIC(3y)13.3%
ROIC(5y)12.38%
1.3 Margins
The Profit Margin of DEO (17.79%) is better than 86.21% of its industry peers.
In the last couple of years the Profit Margin of DEO has declined.
With an excellent Operating Margin value of 28.74%, DEO belongs to the best of the industry, outperforming 93.10% of the companies in the same industry.
DEO's Operating Margin has declined in the last couple of years.
The Gross Margin of DEO (60.45%) is better than 93.10% of its industry peers.
In the last couple of years the Gross Margin of DEO has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 28.74% | ||
| PM (TTM) | 17.79% | ||
| GM | 60.45% |
OM growth 3Y-0.1%
OM growth 5Y-1.72%
PM growth 3Y-2.95%
PM growth 5Y-4.91%
GM growth 3Y-0.14%
GM growth 5Y-0.65%
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.
The number of shares outstanding for DEO has been reduced compared to 1 year ago.
The number of shares outstanding for DEO has been reduced compared to 5 years ago.
DEO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.42 indicates that DEO is not a great score, but indicates only limited risk for bankruptcy at the moment.
DEO has a Altman-Z score (2.42) which is comparable to the rest of the industry.
DEO has a debt to FCF ratio of 8.05. This is a slightly negative value and a sign of low solvency as DEO would need 8.05 years to pay back of all of its debts.
The Debt to FCF ratio of DEO (8.05) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.87 is on the high side and indicates that DEO has dependencies on debt financing.
With a Debt to Equity ratio value of 1.87, DEO is not doing good in the industry: 82.76% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.87 | ||
| Debt/FCF | 8.05 | ||
| Altman-Z | 2.42 |
ROIC/WACC1.59
WACC7.81%
2.3 Liquidity
DEO has a Current Ratio of 1.60. This is a normal value and indicates that DEO is financially healthy and should not expect problems in meeting its short term obligations.
DEO's Current ratio of 1.60 is in line compared to the rest of the industry. DEO outperforms 48.28% of its industry peers.
A Quick Ratio of 0.67 indicates that DEO may have some problems paying its short term obligations.
DEO's Quick ratio of 0.67 is on the low side compared to the rest of the industry. DEO is outperformed by 62.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.6 | ||
| Quick Ratio | 0.67 |
3. Growth
3.1 Past
DEO shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -10.02%.
Measured over the past 5 years, DEO shows a small growth in Earnings Per Share. The EPS has been growing by 6.58% on average per year.
The Revenue has decreased by -0.93% in the past year.
The Revenue has been growing by 9.51% on average over the past years. This is quite good.
EPS 1Y (TTM)-10.02%
EPS 3Y9.77%
EPS 5Y6.58%
EPS Q2Q%-9.65%
Revenue 1Y (TTM)-0.93%
Revenue growth 3Y7.38%
Revenue growth 5Y9.51%
Sales Q2Q%-0.56%
3.2 Future
DEO is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 4.91% yearly.
DEO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.78% yearly.
EPS Next Y-5.28%
EPS Next 2Y0.12%
EPS Next 3Y1.96%
EPS Next 5Y4.91%
Revenue Next Year0%
Revenue Next 2Y1.46%
Revenue Next 3Y2.52%
Revenue Next 5Y3.78%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 16.12, DEO is valued correctly.
72.41% of the companies in the same industry are more expensive than DEO, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of DEO to the average of the S&P500 Index (29.75), we can say DEO is valued slightly cheaper.
With a Price/Forward Earnings ratio of 15.15, DEO is valued correctly.
DEO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. DEO is cheaper than 75.86% of the companies in the same industry.
DEO's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 22.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.12 | ||
| Fwd PE | 15.15 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DEO is valued a bit cheaper than 62.07% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, DEO is valued a bit cheaper than the industry average as 72.41% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.47 | ||
| EV/EBITDA | 12.71 |
4.3 Compensation for Growth
The decent profitability rating of DEO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.45
EPS Next 2Y0.12%
EPS Next 3Y1.96%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 3.84%.
Compared to an average industry Dividend Yield of 3.17, DEO pays a better dividend. On top of this DEO pays more dividend than 89.66% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.30, DEO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.84% |
5.2 History
The dividend of DEO is nicely growing with an annual growth rate of 8.40%!
DEO has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of DEO decreased in the last 3 years.
Dividend Growth(5Y)8.4%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
63.78% 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.
DP63.78%
EPS Next 2Y0.12%
EPS Next 3Y1.96%
109.15
+0.33 (+0.3%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners63.08%
Inst Owner Change14.56%
Ins Owners0.06%
Ins Owner ChangeN/A
Market Cap60.64B
Analysts73.75
Price Target137.52 (25.99%)
Short Float %0.21%
Short Ratio0.98
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.84% |
Yearly Dividend1.01
Dividend Growth(5Y)8.4%
DP63.78%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)N/A
Avg EPS beat(2)N/A
Min EPS beat(2)N/A
Max EPS beat(2)N/A
EPS beat(4)N/A
Avg EPS beat(4)N/A
Min EPS beat(4)N/A
Max EPS beat(4)N/A
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)N/A
Avg Revenue beat(2)N/A
Min Revenue beat(2)N/A
Max Revenue beat(2)N/A
Revenue beat(4)N/A
Avg Revenue beat(4)N/A
Min Revenue beat(4)N/A
Max Revenue beat(4)N/A
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0%
PT rev (3m)0.4%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-2.33%
EPS NY rev (3m)-7.19%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.1%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.12 | ||
| Fwd PE | 15.15 | ||
| P/S | 3 | ||
| P/FCF | 22.47 | ||
| P/OCF | 14.24 | ||
| P/B | 5.9 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.71 |
EPS(TTM)6.77
EY6.2%
EPS(NY)7.2
Fwd EY6.6%
FCF(TTM)4.86
FCFY4.45%
OCF(TTM)7.66
OCFY7.02%
SpS36.38
BVpS18.51
TBVpS-8.06
PEG (NY)N/A
PEG (5Y)2.45
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.66% | ||
| ROE | 34.96% | ||
| ROCE | 15.92% | ||
| ROIC | 12.39% | ||
| ROICexc | 13.1% | ||
| ROICexgc | 22.91% | ||
| OM | 28.74% | ||
| PM (TTM) | 17.79% | ||
| GM | 60.45% | ||
| FCFM | 13.35% |
ROA(3y)9.1%
ROA(5y)7.97%
ROE(3y)41.78%
ROE(5y)36.94%
ROIC(3y)13.3%
ROIC(5y)12.38%
ROICexc(3y)14.07%
ROICexc(5y)13.37%
ROICexgc(3y)25.04%
ROICexgc(5y)24.42%
ROCE(3y)17.22%
ROCE(5y)16.02%
ROICexcg growth 3Y-1.37%
ROICexcg growth 5Y-3.39%
ROICexc growth 3Y1.39%
ROICexc growth 5Y0.11%
OM growth 3Y-0.1%
OM growth 5Y-1.72%
PM growth 3Y-2.95%
PM growth 5Y-4.91%
GM growth 3Y-0.14%
GM growth 5Y-0.65%
F-Score7
Asset Turnover0.43
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.87 | ||
| Debt/FCF | 8.05 | ||
| Debt/EBITDA | 3.06 | ||
| Cap/Depr | 331.21% | ||
| Cap/Sales | 7.72% | ||
| Interest Coverage | 5.43 | ||
| Cash Conversion | 67.82% | ||
| Profit Quality | 75.05% | ||
| Current Ratio | 1.6 | ||
| Quick Ratio | 0.67 | ||
| Altman-Z | 2.42 |
F-Score7
WACC7.81%
ROIC/WACC1.59
Cap/Depr(3y)182.68%
Cap/Depr(5y)145.23%
Cap/Sales(3y)7.15%
Cap/Sales(5y)6.46%
Profit Quality(3y)67.85%
Profit Quality(5y)86.47%
High Growth Momentum
Growth
EPS 1Y (TTM)-10.02%
EPS 3Y9.77%
EPS 5Y6.58%
EPS Q2Q%-9.65%
EPS Next Y-5.28%
EPS Next 2Y0.12%
EPS Next 3Y1.96%
EPS Next 5Y4.91%
Revenue 1Y (TTM)-0.93%
Revenue growth 3Y7.38%
Revenue growth 5Y9.51%
Sales Q2Q%-0.56%
Revenue Next Year0%
Revenue Next 2Y1.46%
Revenue Next 3Y2.52%
Revenue Next 5Y3.78%
EBIT growth 1Y-3.52%
EBIT growth 3Y7.27%
EBIT growth 5Y7.63%
EBIT Next Year10.42%
EBIT Next 3Y5.23%
EBIT Next 5Y3.41%
FCF growth 1Y24.1%
FCF growth 3Y-12.98%
FCF growth 5Y-0.09%
OCF growth 1Y25.12%
OCF growth 3Y-4.63%
OCF growth 5Y4.64%