DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
NYSE:DEO - New York Stock Exchange, Inc. - US25243Q2057 - ADR - Currency: USD
Taking everything into account, DEO scores 5 out of 10 in our fundamental rating. DEO was compared to 32 industry peers in the Beverages industry. While DEO belongs to the best of the industry regarding profitability, there are concerns on its financial health. DEO has a valuation in line with the averages, but on the other hand it scores bad on growth.
1. Profitability
1.1 Basic Checks
DEO had positive earnings in the past year.
In the past year DEO had a positive cash flow from operations.
Each year in the past 5 years DEO has been profitable.
Each year in the past 5 years DEO had a positive operating cash flow.
1.2 Ratios
DEO's Return On Assets of 8.51% is fine compared to the rest of the industry. DEO outperforms 62.07% of its industry peers.
Looking at the Return On Equity, with a value of 38.58%, DEO belongs to the top of the industry, outperforming 86.21% of the companies in the same industry.
DEO has a Return On Invested Capital of 12.82%. This is in the better half of the industry: DEO outperforms 68.97% 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 13.25%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.51% | ||
| ROE | 38.58% | ||
| ROIC | 12.82% |
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
DEO has a better Profit Margin (19.09%) than 86.21% of its industry peers.
DEO's Profit Margin has declined in the last couple of years.
The Operating Margin of DEO (29.33%) is better than 93.10% of its industry peers.
DEO's Operating Margin has declined in the last couple of years.
DEO's Gross Margin of 60.18% is amongst the best of the industry. DEO outperforms 86.21% 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 | 29.33% | ||
| PM (TTM) | 19.09% | ||
| GM | 60.18% |
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
DEO has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
DEO has less shares outstanding than it did 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
DEO has an Altman-Z score of 2.57. This is not the best score and indicates that DEO is in the grey zone with still only limited risk for bankruptcy at the moment.
DEO has a Altman-Z score of 2.57. This is comparable to the rest of the industry: DEO outperforms 44.83% of its industry peers.
The Debt to FCF ratio of DEO is 8.38, which is on the high side as it means it would take DEO, 8.38 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of DEO (8.38) is comparable to the rest of the industry.
A Debt/Equity ratio of 1.91 is on the high side and indicates that DEO has dependencies on debt financing.
DEO's Debt to Equity ratio of 1.91 is on the low side compared to the rest of the industry. DEO is outperformed by 82.76% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.91 | ||
| Debt/FCF | 8.38 | ||
| Altman-Z | 2.57 |
ROIC/WACC1.66
WACC7.72%
2.3 Liquidity
DEO has a Current Ratio of 1.53. This is a normal value and indicates that DEO is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.53, DEO perfoms like the industry average, outperforming 51.72% of the companies in the same industry.
A Quick Ratio of 0.55 indicates that DEO may have some problems paying its short term obligations.
DEO has a worse Quick ratio (0.55) than 65.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.53 | ||
| Quick Ratio | 0.55 |
3. Growth
3.1 Past
The earnings per share for DEO have decreased by -8.21% in the last year.
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 -1.39% 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)-8.21%
EPS 3Y9.77%
EPS 5Y6.58%
EPS Q2Q%-10.52%
Revenue 1Y (TTM)-1.39%
Revenue growth 3Y7.38%
Revenue growth 5Y9.51%
Sales Q2Q%1.89%
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.
The Revenue is expected to grow by 3.78% on average over the next years.
EPS Next Y-3.15%
EPS Next 2Y1.18%
EPS Next 3Y2.56%
EPS Next 5Y4.91%
Revenue Next Year-0.04%
Revenue Next 2Y1.67%
Revenue Next 3Y2.81%
Revenue Next 5Y3.78%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
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
Based on the Price/Earnings ratio of 16.66, the valuation of DEO can be described as correct.
Based on the Price/Earnings ratio, DEO is valued a bit cheaper than the industry average as 72.41% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 28.46, DEO is valued a bit cheaper.
The Price/Forward Earnings ratio is 17.21, which indicates a rather expensive current valuation of DEO.
Based on the Price/Forward Earnings ratio, DEO is valued a bit cheaper than the industry average as 72.41% of the companies are valued more expensively.
DEO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 92.56.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.66 | ||
| Fwd PE | 17.21 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of DEO indicates a somewhat cheap valuation: DEO is cheaper than 62.07% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, DEO is valued a bit cheaper than the industry average as 62.07% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 25.98 | ||
| EV/EBITDA | 13.33 |
4.3 Compensation for Growth
DEO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.53
EPS Next 2Y1.18%
EPS Next 3Y2.56%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 3.27%. Purely for dividend investing, there may be better candidates out there.
DEO's Dividend Yield is a higher than the industry average which is at 3.20.
Compared to an average S&P500 Dividend Yield of 2.27, DEO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.27% |
5.2 History
On average, the dividend of DEO grows each year by 8.40%, which is quite nice.
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
57.93% of the earnings are spent on dividend by DEO. This is a bit on the high side, but may be sustainable.
The dividend of DEO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP57.93%
EPS Next 2Y1.18%
EPS Next 3Y2.56%
DIAGEO PLC-SPONSORED ADR
NYSE:DEO (1/31/2025, 8:26:03 PM)
After market: 119.88 -0.09 (-0.08%)119.97
-1.6 (-1.32%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners71.89%
Inst Owner Change13.32%
Ins Owners0.09%
Ins Owner ChangeN/A
Market Cap66.65B
Analysts74.38
Price Target137.52 (14.63%)
Short Float %0.19%
Short Ratio0.95
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.27% |
Yearly Dividend1.01
Dividend Growth(5Y)8.4%
DP57.93%
Div Incr Years2
Div Non Decr Years2
Ex-DateN/A
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)0.82%
PT rev (3m)-3.53%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-4.98%
EPS NY rev (3m)-4.98%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.05%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.66 | ||
| Fwd PE | 17.21 | ||
| P/S | 3.29 | ||
| P/FCF | 25.98 | ||
| P/OCF | 16.36 | ||
| P/B | 6.64 | ||
| P/tB | N/A | ||
| EV/EBITDA | 13.33 |
EPS(TTM)7.2
EY6%
EPS(NY)6.97
Fwd EY5.81%
FCF(TTM)4.62
FCFY3.85%
OCF(TTM)7.34
OCFY6.11%
SpS36.49
BVpS18.06
TBVpS-8.61
PEG (NY)N/A
PEG (5Y)2.53
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.51% | ||
| ROE | 38.58% | ||
| ROCE | 16.7% | ||
| ROIC | 12.82% | ||
| ROICexc | 13.37% | ||
| ROICexgc | 23.36% | ||
| OM | 29.33% | ||
| PM (TTM) | 19.09% | ||
| GM | 60.18% | ||
| FCFM | 12.65% |
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)14.05%
ROICexc(5y)13.36%
ROICexgc(3y)24.98%
ROICexgc(5y)24.39%
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-Score6
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.91 | ||
| Debt/FCF | 8.38 | ||
| Debt/EBITDA | 2.97 | ||
| Cap/Depr | 306.29% | ||
| Cap/Sales | 7.45% | ||
| Interest Coverage | 5.85 | ||
| Cash Conversion | 63.3% | ||
| Profit Quality | 66.28% | ||
| Current Ratio | 1.53 | ||
| Quick Ratio | 0.55 | ||
| Altman-Z | 2.57 |
F-Score6
WACC7.72%
ROIC/WACC1.66
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)-8.21%
EPS 3Y9.77%
EPS 5Y6.58%
EPS Q2Q%-10.52%
EPS Next Y-3.15%
EPS Next 2Y1.18%
EPS Next 3Y2.56%
EPS Next 5Y4.91%
Revenue 1Y (TTM)-1.39%
Revenue growth 3Y7.38%
Revenue growth 5Y9.51%
Sales Q2Q%1.89%
Revenue Next Year-0.04%
Revenue Next 2Y1.67%
Revenue Next 3Y2.81%
Revenue Next 5Y3.78%
EBIT growth 1Y-5.83%
EBIT growth 3Y7.27%
EBIT growth 5Y7.63%
EBIT Next Year10.42%
EBIT Next 3Y5.23%
EBIT Next 5Y3.41%
FCF growth 1Y15.59%
FCF growth 3Y-12.98%
FCF growth 5Y-0.09%
OCF growth 1Y12.07%
OCF growth 3Y-4.63%
OCF growth 5Y4.64%