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 on the other hand it scores bad on growth.
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.
In the past 5 years DEO has always 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 7.66%, DEO is in the better half of the industry, outperforming 68.75% of the companies in the same industry.
The Return On Equity of DEO (34.96%) is better than 87.50% of its industry peers.
With a decent Return On Invested Capital value of 12.39%, DEO is doing good in the industry, outperforming 65.63% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for DEO is in line with the industry average of 12.21%.
| 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
With an excellent Profit Margin value of 17.79%, DEO belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
In the last couple of years the Profit Margin of DEO has declined.
DEO has a better Operating Margin (28.74%) than 93.75% of its industry peers.
DEO's Operating Margin has declined in the last couple of years.
With an excellent Gross Margin value of 60.45%, DEO belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
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 | 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
DEO has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is 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 2.44 indicates that DEO is not a great score, but indicates only limited risk for bankruptcy at the moment.
DEO has a Altman-Z score (2.44) which is in line with its industry peers.
DEO has a debt to FCF ratio of 8.05. This is a slightly negative value and a sign of low solvency as DEO would need 8.05 years to pay back of all of its debts.
DEO has a Debt to FCF ratio (8.05) which is comparable to the rest of the industry.
DEO has a Debt/Equity ratio of 1.87. This is a high value indicating a heavy dependency on external financing.
DEO's Debt to Equity ratio of 1.87 is on the low side compared to the rest of the industry. DEO is outperformed by 75.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.87 | ||
| Debt/FCF | 8.05 | ||
| Altman-Z | 2.44 |
ROIC/WACC1.58
WACC7.82%
2.3 Liquidity
DEO has a Current Ratio of 1.60. 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 (1.60) which is comparable to the rest of the industry.
DEO has a Quick Ratio of 1.60. This is a bad value and indicates that DEO is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.67, DEO is in line with its industry, outperforming 43.75% of the companies in the same industry.
| 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%.
The Earnings Per Share has been growing slightly by 6.58% on average over the past years.
The Revenue has decreased by -0.93% in the past year.
Measured over the past years, DEO shows a quite strong growth in Revenue. The Revenue has been growing by 9.51% on average per year.
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 Year0.04%
Revenue Next 2Y1.46%
Revenue Next 3Y2.5%
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
The Price/Earnings ratio is 16.43, which indicates a correct valuation of DEO.
Based on the Price/Earnings ratio, DEO is valued cheaply inside the industry as 87.50% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 28.87. DEO is valued slightly cheaper when compared to this.
The Price/Forward Earnings ratio is 15.78, which indicates a correct valuation of DEO.
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.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.38, DEO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.43 | ||
| Fwd PE | 15.78 |
4.2 Price Multiples
62.50% of the companies in the same industry are more expensive than DEO, based on the Enterprise Value to EBITDA ratio.
DEO's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. DEO is cheaper than 78.13% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.9 | ||
| EV/EBITDA | 12.93 |
4.3 Compensation for Growth
DEO has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.5
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 3.76%.
Compared to an average industry Dividend Yield of 3.03, DEO pays a better dividend. On top of this DEO pays more dividend than 84.38% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.46, DEO pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.76% |
5.2 History
On average, the dividend of DEO grows each year by 8.40%, which is quite nice.
DEO has paid a dividend for at least 10 years, which is 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%
111.2
+0.63 (+0.57%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners63.08%
Inst Owner Change-12.16%
Ins Owners0.06%
Ins Owner ChangeN/A
Market Cap61.78B
Analysts75
Price Target140.38 (26.24%)
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)4.35%
PT rev (3m)2.91%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.39%
EPS NY rev (3m)-9.23%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)-0.02%
Revenue NY rev (3m)0.08%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.43 | ||
| Fwd PE | 15.78 | ||
| P/S | 3.06 | ||
| P/FCF | 22.9 | ||
| P/OCF | 14.51 | ||
| P/B | 6.01 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.93 |
EPS(TTM)6.77
EY6.09%
EPS(NY)7.05
Fwd EY6.34%
FCF(TTM)4.86
FCFY4.37%
OCF(TTM)7.66
OCFY6.89%
SpS36.37
BVpS18.51
TBVpS-8.06
PEG (NY)N/A
PEG (5Y)2.5
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 | 2.44 |
F-Score7
WACC7.82%
ROIC/WACC1.58
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 Year0.04%
Revenue Next 2Y1.46%
Revenue Next 3Y2.5%
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%