DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
NYSE:DEO - New York Stock Exchange, Inc. - US25243Q2057 - ADR - Currency: USD
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 an excellent profitability rating, 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.
DEO had positive earnings in each of the past 5 years.
In the past 5 years DEO always reported a positive cash flow from operatings.
1.2 Ratios
DEO has a better Return On Assets (7.66%) than 65.63% of its industry peers.
Looking at the Return On Equity, with a value of 34.96%, DEO belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
The Return On Invested Capital of DEO (12.39%) is better than 62.50% 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 11.51%.
| 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.
DEO's Profit Margin has declined in the last couple of years.
Looking at the Operating Margin, with a value of 28.74%, DEO belongs to the top of the industry, outperforming 90.63% 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 90.63% 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
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 2.32 indicates that DEO is not a great score, but indicates only limited risk for bankruptcy at the moment.
DEO has a Altman-Z score (2.32) which is in line with its industry peers.
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's Debt to FCF ratio of 8.05 is in line compared to the rest of the industry. DEO outperforms 53.13% of its industry peers.
DEO has a Debt/Equity ratio of 1.87. This is a high value indicating a heavy dependency on external financing.
With a Debt to Equity ratio value of 1.87, DEO is not doing good in the industry: 87.50% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.87 | ||
| Debt/FCF | 8.05 | ||
| Altman-Z | 2.32 |
ROIC/WACC1.63
WACC7.59%
2.3 Liquidity
A Current Ratio of 1.60 indicates that DEO should not have too much problems paying its short term obligations.
With a Current ratio value of 1.60, DEO perfoms like the industry average, outperforming 56.25% of the companies in the same industry.
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 40.63% 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.
Looking at the last year, DEO shows a decrease in Revenue. The Revenue has decreased by -0.93% in the last year.
DEO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 9.51% yearly.
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
The Earnings Per Share is expected to grow by 4.61% on average over the next years.
DEO is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.59% yearly.
EPS Next Y-7.36%
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
EPS Next 5Y4.61%
Revenue Next Year1.91%
Revenue Next 2Y2.18%
Revenue Next 3Y2.82%
Revenue Next 5Y3.59%
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 14.50, the valuation of DEO can be described as correct.
Based on the Price/Earnings ratio, DEO is valued cheaply inside the industry as 81.25% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of DEO to the average of the S&P500 Index (27.24), we can say DEO is valued slightly cheaper.
Based on the Price/Forward Earnings ratio of 13.93, the valuation of DEO can be described as correct.
Based on the Price/Forward Earnings ratio, DEO is valued cheaper than 81.25% of the companies in the same industry.
DEO's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 36.42.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.5 | ||
| Fwd PE | 13.93 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DEO is valued a bit cheaper than 68.75% 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 78.13% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.22 | ||
| EV/EBITDA | 11.77 |
4.3 Compensation for Growth
The decent profitability rating of DEO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.2
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 4.25%, which is a nice return.
Compared to an average industry Dividend Yield of 2.83, 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 2.40, DEO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.25% |
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.
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
DEO pays out 63.78% 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.
DP63.78%
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
98.17
+0.71 (+0.73%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners59.21%
Inst Owner Change-0.54%
Ins Owners0.07%
Ins Owner ChangeN/A
Market Cap54.54B
Analysts75.76
Price Target129.74 (32.16%)
Short Float %0.13%
Short Ratio0.74
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.25% |
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)-2.27%
PT rev (3m)-7.58%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)1.77%
Revenue NY rev (3m)1.87%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.5 | ||
| Fwd PE | 13.93 | ||
| P/S | 2.7 | ||
| P/FCF | 20.22 | ||
| P/OCF | 12.81 | ||
| P/B | 5.3 | ||
| P/tB | N/A | ||
| EV/EBITDA | 11.77 |
EPS(TTM)6.77
EY6.9%
EPS(NY)7.05
Fwd EY7.18%
FCF(TTM)4.86
FCFY4.95%
OCF(TTM)7.66
OCFY7.81%
SpS36.37
BVpS18.51
TBVpS-8.06
PEG (NY)N/A
PEG (5Y)2.2
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)14.04%
ROICexc(5y)13.35%
ROICexgc(3y)24.95%
ROICexgc(5y)24.37%
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 | 2.32 |
F-Score7
WACC7.59%
ROIC/WACC1.63
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 5Y4.61%
Revenue 1Y (TTM)-0.93%
Revenue growth 3Y7.38%
Revenue growth 5Y9.51%
Sales Q2Q%-0.56%
Revenue Next Year1.91%
Revenue Next 2Y2.18%
Revenue Next 3Y2.82%
Revenue Next 5Y3.59%
EBIT growth 1Y-3.52%
EBIT growth 3Y7.27%
EBIT growth 5Y7.63%
EBIT Next Year10.13%
EBIT Next 3Y6.69%
EBIT Next 5Y3.77%
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%