DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
USA - NYSE:DEO - US25243Q2057 - ADR
95.68 USD
+0.27 (+0.28%)
95 USD
-0.68 (-0.71%)
Overall DEO gets a fundamental rating of 5 out of 10. We evaluated DEO against 33 industry peers in the Beverages industry. DEO has a medium profitability rating, but doesn't score so well on its financial health evaluation. DEO is not valued too expensively and it also shows a decent growth rate.
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.
Each year in the past 5 years DEO has been profitable.
DEO had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 4.77%, DEO is in line with its industry, outperforming 57.58% of the companies in the same industry.
The Return On Equity of DEO (21.23%) is better than 75.76% of its industry peers.
DEO has a Return On Invested Capital (8.31%) which is comparable to the rest of the industry.
The Average Return On Invested Capital over the past 3 years for DEO is in line with the industry average of 10.78%.
| 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 better Profit Margin (11.63%) than 78.79% of its industry peers.
DEO's Profit Margin has been stable in the last couple of years.
The Operating Margin of DEO (21.41%) is better than 75.76% of its industry peers.
In the last couple of years the Operating Margin of DEO has declined.
The Gross Margin of DEO (60.13%) is better than 90.91% 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 | 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.
The number of shares outstanding for DEO has been reduced compared to 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 2.10. 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 (2.10) which is comparable to the rest of the industry.
DEO has a debt to FCF ratio of 8.78. This is a slightly negative value and a sign of low solvency as DEO would need 8.78 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 8.78, DEO is in line with its industry, outperforming 48.48% of the companies in the same industry.
A Debt/Equity ratio of 1.88 is on the high side and indicates that DEO has dependencies on debt financing.
DEO has a Debt to Equity ratio of 1.88. This is amonst the worse of the industry: DEO underperforms 87.88% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 8.78 | ||
| Altman-Z | 2.1 |
ROIC/WACC1.12
WACC7.4%
2.3 Liquidity
DEO has a Current Ratio of 1.63. This is a normal value and indicates that DEO is financially healthy and should not expect problems in meeting its short term obligations.
DEO has a Current ratio of 1.63. This is in the better half of the industry: DEO outperforms 60.61% of its industry peers.
DEO has a Quick Ratio of 1.63. This is a bad value and indicates that DEO is not financially healthy enough and could expect problems in meeting its short term obligations.
DEO's Quick ratio of 0.64 is on the low side compared to the rest of the industry. DEO is outperformed by 72.73% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.63 | ||
| Quick Ratio | 0.64 |
3. Growth
3.1 Past
The earnings per share for DEO have decreased by -8.65% in the last year.
Measured over the past years, DEO shows a quite strong growth in Earnings Per Share. The EPS has been growing by 8.47% on average per year.
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 5Y8.47%
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 7.93% 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 3.47% yearly.
EPS Next Y7.28%
EPS Next 2Y6.4%
EPS Next 3Y6.52%
EPS Next 5Y7.93%
Revenue Next Year0.82%
Revenue Next 2Y2.25%
Revenue Next 3Y1.66%
Revenue Next 5Y3.47%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
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
With a Price/Earnings ratio of 14.59, DEO is valued correctly.
Based on the Price/Earnings ratio, DEO is valued a bit cheaper than the industry average as 72.73% of the companies are valued more expensively.
DEO's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.02.
DEO is valuated correctly with a Price/Forward Earnings ratio of 13.59.
Compared to the rest of the industry, the Price/Forward Earnings ratio of DEO indicates a somewhat cheap valuation: DEO is cheaper than 66.67% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of DEO to the average of the S&P500 Index (22.57), we can say DEO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.59 | ||
| Fwd PE | 13.59 |
4.2 Price Multiples
DEO's Enterprise Value to EBITDA is on the same level as the industry average.
Based on the Price/Free Cash Flow ratio, DEO is valued a bit cheaper than 75.76% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 19.64 | ||
| EV/EBITDA | 12.14 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
DEO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)2
PEG (5Y)1.72
EPS Next 2Y6.4%
EPS Next 3Y6.52%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 4.30%, which is a nice return.
DEO's Dividend Yield is rather good when compared to the industry average which is at 2.99. DEO pays more dividend than 96.97% of the companies in the same industry.
DEO's Dividend Yield is rather good when compared to the S&P500 average which is at 2.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.3% |
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.
DEO's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP97.62%
EPS Next 2Y6.4%
EPS Next 3Y6.52%
95.68
+0.27 (+0.28%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners63.72%
Inst Owner Change-0.03%
Ins Owners0.06%
Ins Owner ChangeN/A
Market Cap53.16B
Analysts76.25
Price Target125.78 (31.46%)
Short Float %0.24%
Short Ratio0.97
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 4.3% |
Yearly Dividend1.03
Dividend Growth(5Y)8.14%
DP97.62%
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)-1.68%
PT rev (3m)-5.25%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0.09%
EPS NY rev (3m)-0.08%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)-0.1%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 14.59 | ||
| Fwd PE | 13.59 | ||
| P/S | 2.63 | ||
| P/FCF | 19.64 | ||
| P/OCF | 12.31 | ||
| P/B | 4.79 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.14 |
EPS(TTM)6.56
EY6.86%
EPS(NY)7.04
Fwd EY7.36%
FCF(TTM)4.87
FCFY5.09%
OCF(TTM)7.77
OCFY8.12%
SpS36.44
BVpS19.96
TBVpS-6.63
PEG (NY)2
PEG (5Y)1.72
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.77% | ||
| ROE | 21.23% | ||
| ROCE | 11.23% | ||
| ROIC | 8.31% | ||
| ROICexc | 8.94% | ||
| ROICexgc | 15.19% | ||
| OM | 21.41% | ||
| PM (TTM) | 11.63% | ||
| GM | 60.13% | ||
| FCFM | 13.37% |
ROA(3y)7.73%
ROA(5y)8.08%
ROE(3y)34.97%
ROE(5y)37.03%
ROIC(3y)11.21%
ROIC(5y)11.47%
ROICexc(3y)11.83%
ROICexc(5y)12.24%
ROICexgc(3y)20.56%
ROICexgc(5y)21.89%
ROCE(3y)15.27%
ROCE(5y)15.6%
ROICexcg growth 3Y-14.98%
ROICexcg growth 5Y-6.83%
ROICexc growth 3Y-12.89%
ROICexc growth 5Y-4.5%
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%
F-Score4
Asset Turnover0.41
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.88 | ||
| Debt/FCF | 8.78 | ||
| Debt/EBITDA | 3.44 | ||
| Cap/Depr | 93.83% | ||
| Cap/Sales | 7.96% | ||
| Interest Coverage | 4.42 | ||
| Cash Conversion | 71.34% | ||
| Profit Quality | 114.95% | ||
| Current Ratio | 1.63 | ||
| Quick Ratio | 0.64 | ||
| Altman-Z | 2.1 |
F-Score4
WACC7.4%
ROIC/WACC1.12
Cap/Depr(3y)169.79%
Cap/Depr(5y)156.38%
Cap/Sales(3y)7.44%
Cap/Sales(5y)6.86%
Profit Quality(3y)77.05%
Profit Quality(5y)86.47%
High Growth Momentum
Growth
EPS 1Y (TTM)-8.65%
EPS 3Y-6.76%
EPS 5Y8.47%
EPS Q2Q%-7.14%
EPS Next Y7.28%
EPS Next 2Y6.4%
EPS Next 3Y6.52%
EPS Next 5Y7.93%
Revenue 1Y (TTM)-0.12%
Revenue growth 3Y-1.08%
Revenue growth 5Y11.49%
Sales Q2Q%-3.34%
Revenue Next Year0.82%
Revenue Next 2Y2.25%
Revenue Next 3Y1.66%
Revenue Next 5Y3.47%
EBIT growth 1Y-27.08%
EBIT growth 3Y-12.6%
EBIT growth 5Y3.92%
EBIT Next Year19.08%
EBIT Next 3Y7.75%
EBIT Next 5Y6.12%
FCF growth 1Y5.5%
FCF growth 3Y-11.02%
FCF growth 5Y10.81%
OCF growth 1Y5.96%
OCF growth 3Y-6.76%
OCF growth 5Y13.23%