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 has an excellent profitability rating, but there are concerns on its financial health. DEO is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
DEO had positive earnings in the past year.
DEO had a positive operating cash flow in the past year.
DEO had positive earnings in each of the past 5 years.
DEO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of DEO (7.66%) is better than 68.75% of its industry peers.
The Return On Equity of DEO (34.96%) is better than 87.50% of its industry peers.
DEO has a better Return On Invested Capital (12.39%) than 65.63% 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 12.18%.
| 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
DEO has a Profit Margin of 17.79%. This is amongst the best in the industry. DEO outperforms 87.50% of its industry peers.
In the last couple of years the Profit Margin of DEO has declined.
Looking at the Operating Margin, with a value of 28.74%, DEO belongs to the top of the industry, outperforming 93.75% of the companies in the same industry.
DEO's Operating Margin has declined in the last couple of years.
DEO's Gross Margin of 60.45% is amongst the best of 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 | 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), DEO is creating some value.
DEO has less shares outstanding than it did 1 year ago.
DEO has less shares outstanding than it did 5 years ago.
Compared to 1 year ago, DEO has a worse debt to assets ratio.
2.2 Solvency
DEO has an Altman-Z score of 2.45. 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 2.45, DEO perfoms like the industry average, outperforming 56.25% of the companies in the same industry.
The Debt to FCF ratio of DEO is 8.05, which is on the high side as it means it would take DEO, 8.05 years of fcf income to pay off all of its debts.
DEO has a Debt to FCF ratio (8.05) which is in line with its industry peers.
A Debt/Equity ratio of 1.87 is on the high side and indicates that DEO has dependencies on debt financing.
DEO has a worse Debt to Equity ratio (1.87) than 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.87 | ||
| Debt/FCF | 8.05 | ||
| Altman-Z | 2.45 |
ROIC/WACC1.59
WACC7.81%
2.3 Liquidity
A Current Ratio of 1.60 indicates that DEO should not have too much problems paying its short term obligations.
DEO has a Current ratio of 1.60. This is comparable to the rest of the industry: DEO outperforms 56.25% 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 in line compared to the rest of the industry. DEO outperforms 43.75% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.6 | ||
| Quick Ratio | 0.67 |
3. Growth
3.1 Past
The earnings per share for DEO have decreased strongly by -10.02% in the last year.
DEO shows a small growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 6.58% yearly.
DEO shows a decrease in Revenue. In the last year, the revenue decreased by -0.93%.
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
Based on estimates for the next years, DEO will show a small growth in Earnings Per Share. The EPS will grow by 4.67% on average per year.
DEO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.85% yearly.
EPS Next Y-7.36%
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
EPS Next 5Y4.67%
Revenue Next Year0.06%
Revenue Next 2Y1.47%
Revenue Next 3Y2.52%
Revenue Next 5Y3.85%
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
With a Price/Earnings ratio of 16.33, DEO is valued correctly.
Based on the Price/Earnings ratio, DEO is valued cheaper than 87.50% of the companies in the same industry.
When comparing the Price/Earnings ratio of DEO to the average of the S&P500 Index (28.79), we can say DEO is valued slightly cheaper.
DEO is valuated correctly with a Price/Forward Earnings ratio of 15.69.
DEO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. DEO is cheaper than 78.13% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.38. DEO is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.33 | ||
| Fwd PE | 15.69 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DEO is valued a bit cheaper than 62.50% of the companies in the same industry.
78.13% 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 | 22.77 | ||
| EV/EBITDA | 12.96 |
4.3 Compensation for Growth
The decent profitability rating of DEO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.48
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.76%, DEO has a reasonable but not impressive dividend return.
DEO's Dividend Yield is rather good when compared to the industry average which is at 3.01. DEO pays more dividend than 87.50% of the companies in the same industry.
DEO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.47.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.76% |
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.
DEO has decreased its dividend 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 2Y-0.97%
EPS Next 3Y1.85%
110.57
-1.06 (-0.95%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners63.08%
Inst Owner Change0.18%
Ins Owners0.06%
Ins Owner ChangeN/A
Market Cap61.43B
Analysts75
Price Target140.38 (26.96%)
Short Float %0.07%
Short Ratio0.3
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.76% |
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)2.93%
PT rev (3m)1.51%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-2.2%
EPS NY rev (3m)-9.23%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.41%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.33 | ||
| Fwd PE | 15.69 | ||
| P/S | 3.04 | ||
| P/FCF | 22.77 | ||
| P/OCF | 14.43 | ||
| P/B | 5.97 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.96 |
EPS(TTM)6.77
EY6.12%
EPS(NY)7.05
Fwd EY6.37%
FCF(TTM)4.86
FCFY4.39%
OCF(TTM)7.66
OCFY6.93%
SpS36.37
BVpS18.51
TBVpS-8.06
PEG (NY)N/A
PEG (5Y)2.48
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 | 2.45 |
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-7.36%
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
EPS Next 5Y4.67%
Revenue 1Y (TTM)-0.93%
Revenue growth 3Y7.38%
Revenue growth 5Y9.51%
Sales Q2Q%-0.56%
Revenue Next Year0.06%
Revenue Next 2Y1.47%
Revenue Next 3Y2.52%
Revenue Next 5Y3.85%
EBIT growth 1Y-3.52%
EBIT growth 3Y7.27%
EBIT growth 5Y7.63%
EBIT Next Year7.55%
EBIT Next 3Y5.96%
EBIT Next 5Y3.58%
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%