DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:DEO - US25243Q2057 - ADR
88.98 USD
+0.21 (+0.24%)
DEO gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 32 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.
- In the past year DEO had a positive cash flow from operations.
- DEO had positive earnings in each of the past 5 years.
- 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 50.00% of the companies in the same industry.
- Looking at the Return On Equity, with a value of 21.23%, DEO is in the better half of the industry, outperforming 71.88% of the companies in the same industry.
- DEO has a Return On Invested Capital of 8.31%. This is comparable to the rest of the industry: DEO outperforms 56.25% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for DEO is in line with the industry average of 11.62%.
| 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 has a Profit Margin of 11.63%. This is in the better half of the industry: DEO outperforms 71.88% of its industry peers.
- DEO's Profit Margin has been stable in the last couple of years.
- DEO has a better Operating Margin (21.41%) than 75.00% of its industry peers.
- DEO's Operating Margin has declined in the last couple of years.
- DEO has a Gross Margin of 60.13%. This is amongst the best in the industry. DEO outperforms 87.50% 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
- 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 about the same amout of shares outstanding than it did 1 year ago.
- Compared to 5 years ago, DEO has less shares outstanding
- The debt/assets ratio for DEO is higher compared to a year ago.
2.2 Solvency
- DEO has an Altman-Z score of 2.05. 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.
- With a Altman-Z score value of 2.05, DEO perfoms like the industry average, outperforming 46.88% of the companies in the same industry.
- The Debt to FCF ratio of DEO is 8.78, which is on the high side as it means it would take DEO, 8.78 years of fcf income to pay off all of its debts.
- The Debt to FCF ratio of DEO (8.78) is comparable to the rest of the industry.
- DEO has a Debt/Equity ratio of 1.88. This is a high value indicating a heavy dependency on external financing.
- DEO's Debt to Equity ratio of 1.88 is on the low side compared to the rest of the industry. DEO is outperformed by 87.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 8.78 | ||
| Altman-Z | 2.05 |
ROIC/WACC1.13
WACC7.34%
2.3 Liquidity
- A Current Ratio of 1.63 indicates that DEO should not have too much problems paying its short term obligations.
- DEO has a Current ratio of 1.63. This is comparable to the rest of the industry: DEO outperforms 59.38% of its industry peers.
- A Quick Ratio of 0.64 indicates that DEO may have some problems paying its short term obligations.
- Looking at the Quick ratio, with a value of 0.64, DEO is doing worse than 68.75% of the companies in the same industry.
| 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%.
- DEO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 3.59% yearly.
- DEO shows a decrease in Revenue. In the last year, the revenue decreased by -0.12%.
- The Revenue has been growing by 11.49% on average over the past years. This is quite good.
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.
- Based on estimates for the next years, DEO will show a small growth in Revenue. The Revenue will grow by 2.42% on average per year.
EPS Next Y2.09%
EPS Next 2Y3.39%
EPS Next 3Y4.58%
EPS Next 5Y6.84%
Revenue Next Year-3.03%
Revenue Next 2Y0.1%
Revenue Next 3Y1.32%
Revenue Next 5Y2.42%
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 accelerating.
- 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
- The Price/Earnings ratio is 13.56, which indicates a correct valuation of DEO.
- DEO's Price/Earnings ratio is rather cheap when compared to the industry. DEO is cheaper than 81.25% of the companies in the same industry.
- When comparing the Price/Earnings ratio of DEO to the average of the S&P500 Index (28.82), we can say DEO is valued rather cheaply.
- A Price/Forward Earnings ratio of 13.28 indicates a correct valuation of DEO.
- Based on the Price/Forward Earnings ratio, DEO is valued cheaper than 81.25% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.95, DEO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.56 | ||
| Fwd PE | 13.28 |
4.2 Price Multiples
- DEO's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. DEO is cheaper than 65.63% of the companies in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of DEO indicates a somewhat cheap valuation: DEO is cheaper than 75.00% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.28 | ||
| EV/EBITDA | 11.54 |
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)6.48
PEG (5Y)3.78
EPS Next 2Y3.39%
EPS Next 3Y4.58%
5. Dividend
5.1 Amount
- DEO has a Yearly Dividend Yield of 4.68%, which is a nice return.
- Compared to an average industry Dividend Yield of 1.66, DEO pays a better dividend. On top of this DEO pays more dividend than 96.88% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, DEO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.68% |
5.2 History
- The dividend of DEO is nicely growing with an annual growth rate of 8.14%!
- 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)8.14%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
- DEO pays out 97.62% of its income as dividend. This is not a sustainable payout ratio.
- The dividend of DEO is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP97.62%
EPS Next 2Y3.39%
EPS Next 3Y4.58%
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%.