DIAGEO PLC-SPONSORED ADR (DEO)
US25243Q2057 - ADR
We assign a fundamental rating of 5 out of 10 to DEO. DEO was compared to 33 industry peers in the Beverages industry. DEO scores excellent on profitability, 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
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.
DEO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
With a decent Return On Assets value of 8.68%, DEO is doing good in the industry, outperforming 66.67% of the companies in the same industry.
DEO has a better Return On Equity (41.47%) than 96.97% of its industry peers.
DEO has a better Return On Invested Capital (13.24%) than 66.67% 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 12.06%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.68% | ||
| ROE | 41.47% | ||
| ROIC | 13.24% |
ROA(3y)9.31%
ROA(5y)8.45%
ROE(3y)42.98%
ROE(5y)37.51%
ROIC(3y)13.28%
ROIC(5y)12.58%
1.3 Margins
Looking at the Profit Margin, with a value of 19.47%, DEO belongs to the top of the industry, outperforming 87.88% of the companies in the same industry.
In the last couple of years the Profit Margin of DEO has declined.
Looking at the Operating Margin, with a value of 29.53%, DEO belongs to the top of the industry, outperforming 90.91% of the companies in the same industry.
In the last couple of years the Operating Margin of DEO has remained more or less at the same level.
The Gross Margin of DEO (59.47%) is better than 87.88% 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 | 29.53% | ||
| PM (TTM) | 19.47% | ||
| GM | 59.47% |
OM growth 3Y0.29%
OM growth 5Y-0.45%
PM growth 3Y22.09%
PM growth 5Y-2.56%
GM growth 3Y-0.39%
GM growth 5Y-0.73%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so DEO is creating value.
The number of shares outstanding for DEO has been reduced compared to 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 2.42. 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.
Looking at the Altman-Z score, with a value of 2.42, DEO is in line with its industry, outperforming 51.52% of the companies in the same industry.
The Debt to FCF ratio of DEO is 7.08, which is on the high side as it means it would take DEO, 7.08 years of fcf income to pay off all of its debts.
With a Debt to FCF ratio value of 7.08, DEO perfoms like the industry average, outperforming 51.52% of the companies in the same industry.
A Debt/Equity ratio of 1.99 is on the high side and indicates that DEO has dependencies on debt financing.
DEO's Debt to Equity ratio of 1.99 is on the low side compared to the rest of the industry. DEO is outperformed by 81.82% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.99 | ||
| Debt/FCF | 7.08 | ||
| Altman-Z | 2.42 |
ROIC/WACC1.82
WACC7.29%
2.3 Liquidity
DEO has a Current Ratio of 1.58. This is a normal value and indicates that DEO is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.58, DEO is in line with its industry, outperforming 54.55% of the companies in the same industry.
A Quick Ratio of 0.65 indicates that DEO may have some problems paying its short term obligations.
With a Quick ratio value of 0.65, DEO is not doing good in the industry: 63.64% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.58 | ||
| Quick Ratio | 0.65 |
3. Growth
3.1 Past
DEO shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -6.67%.
Measured over the past years, DEO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 10.58% on average per year.
DEO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 12.02%.
DEO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 12.59% yearly.
EPS 1Y (TTM)-6.67%
EPS 3Y21.44%
EPS 5Y10.58%
EPS growth Q2Q-6.61%
Revenue 1Y (TTM)12.02%
Revenue growth 3Y23.25%
Revenue growth 5Y12.59%
Revenue growth Q2Q-1.42%
3.2 Future
The Earnings Per Share is expected to grow by 2.84% on average over the next years.
DEO is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -1.36% yearly.
EPS Next Y-0.61%
EPS Next 2Y2.22%
EPS Next 3Y3.69%
EPS Next 5Y2.84%
Revenue Next Year-6%
Revenue Next 2Y-1.44%
Revenue Next 3Y0.73%
Revenue Next 5Y-1.36%
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.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 14.43, the valuation of DEO can be described as correct.
Compared to the rest of the industry, the Price/Earnings ratio of DEO indicates a rather cheap valuation: DEO is cheaper than 87.88% of the companies listed in the same industry.
DEO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 24.67.
A Price/Forward Earnings ratio of 13.27 indicates a correct valuation of DEO.
81.82% of the companies in the same industry are more expensive than DEO, based on the Price/Forward Earnings ratio.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.02, DEO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.43 | ||
| Fwd PE | 13.27 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DEO is valued a bit cheaper than 75.76% 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 69.70% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.05 | ||
| EV/EBITDA | 10.53 |
4.3 Compensation for Growth
The decent profitability rating of DEO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)1.36
EPS Next 2Y2.22%
EPS Next 3Y3.69%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 2.94%.
Compared to an average industry Dividend Yield of 2.56, DEO pays a better dividend. On top of this DEO pays more dividend than 84.85% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.40, DEO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.94% |
5.2 History
The dividend of DEO is nicely growing with an annual growth rate of 9.56%!
DEO has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of DEO decreased recently.
Dividend Growth(5Y)9.56%
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
59.56% of the earnings are spent on dividend by DEO. This is a bit on the high side, but may be sustainable.
DEO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP59.56%
EPS Next 2Y2.22%
EPS Next 3Y3.69%
DIAGEO PLC-SPONSORED ADR
NYSE:DEO (5/1/2024, 3:19:09 PM)
After market: 137.05 0 (0%)137.05
-1.11 (-0.8%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap76.26B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.94% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
Max EPS beat(2)
EPS beat(4)
Avg EPS beat(4)
Min EPS beat(4)
Max EPS beat(4)
EPS beat(8)
Avg EPS beat(8)
EPS beat(12)
Avg EPS beat(12)
EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
Avg Revenue beat(2)
Min Revenue beat(2)
Max Revenue beat(2)
Revenue beat(4)
Avg Revenue beat(4)
Min Revenue beat(4)
Max Revenue beat(4)
Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
Avg Revenue beat(12)
Revenue beat(16)
Avg Revenue beat(16)
PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.43 | ||
| Fwd PE | 13.27 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)N/A
PEG (5Y)1.36
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.68% | ||
| ROE | 41.47% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 29.53% | ||
| PM (TTM) | 19.47% | ||
| GM | 59.47% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.45
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.99 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.58 | ||
| Quick Ratio | 0.65 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)-6.67%
EPS 3Y21.44%
EPS 5Y
EPS growth Q2Q
EPS Next Y-0.61%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)12.02%
Revenue growth 3Y23.25%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y