DIAGEO PLC-SPONSORED ADR (DEO) Stock Fundamental Analysis
NYSE:DEO - New York Stock Exchange, Inc. - US25243Q2057 - ADR - Currency: USD
Taking everything into account, DEO scores 5 out of 10 in our fundamental rating. 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
DEO had positive earnings in the past year.
In the past year DEO had a positive cash flow from operations.
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 Return On Assets of 7.66%. This is in the better half of the industry: DEO outperforms 62.50% 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.
DEO has a Return On Invested Capital of 12.39%. This is in the better half of the industry: DEO outperforms 68.75% of its industry peers.
The Average Return On Invested Capital over the past 3 years for DEO is in line with the industry average of 11.44%.
| 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
Looking at the Profit Margin, with a value of 17.79%, DEO belongs to the top of the industry, outperforming 87.50% of the companies in the same industry.
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 96.88% of the companies in the same industry.
In the last couple of years the Operating Margin of DEO has declined.
DEO has a better Gross Margin (60.45%) than 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
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 less shares outstanding than it did 1 year ago.
Compared to 5 years ago, DEO has less shares outstanding
DEO has a worse debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 2.42 indicates that DEO is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of DEO (2.42) is comparable to the rest of the 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 comparable to the rest of the industry.
A Debt/Equity ratio of 1.87 is on the high side and indicates that DEO has dependencies on debt financing.
With a Debt to Equity ratio value of 1.87, DEO is not doing good in the industry: 84.38% of the companies in the same industry are doing better.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.87 | ||
| Debt/FCF | 8.05 | ||
| Altman-Z | 2.42 |
ROIC/WACC1.6
WACC7.75%
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 in line with its industry peers.
A Quick Ratio of 0.67 indicates that DEO may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.67, DEO is doing worse than 62.50% of the companies in the same industry.
| 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.
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.
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
The Earnings Per Share is expected to grow by 4.67% 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 3.85% yearly.
EPS Next Y-7.36%
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
EPS Next 5Y4.67%
Revenue Next Year0.13%
Revenue Next 2Y1.5%
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 16.13, which indicates a correct valuation of DEO.
Based on the Price/Earnings ratio, DEO is valued a bit cheaper than 78.13% of the companies in the same industry.
When comparing the Price/Earnings ratio of DEO to the average of the S&P500 Index (25.91), we can say DEO is valued slightly cheaper.
DEO is valuated correctly with a Price/Forward Earnings ratio of 15.49.
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.
When comparing the Price/Forward Earnings ratio of DEO to the average of the S&P500 Index (21.77), we can say DEO is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.13 | ||
| Fwd PE | 15.49 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of DEO indicates a somewhat cheap valuation: DEO is cheaper than 65.63% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, DEO is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 22.49 | ||
| EV/EBITDA | 12.75 |
4.3 Compensation for Growth
The decent profitability rating of DEO may justify a higher PE ratio.
PEG (NY)N/A
PEG (5Y)2.45
EPS Next 2Y-0.97%
EPS Next 3Y1.85%
5. Dividend
5.1 Amount
DEO has a Yearly Dividend Yield of 3.69%.
Compared to an average industry Dividend Yield of 2.88, DEO pays a better dividend. On top of this DEO pays more dividend than 87.50% 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 | 3.69% |
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.
The dividend of DEO decreased 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.
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%
109.2
-1.66 (-1.5%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupFood, Beverage & Tobacco
GICS IndustryBeverages
Earnings (Last)
Earnings (Next)
Inst Owners63.08%
Inst Owner Change-17.66%
Ins Owners0.06%
Ins Owner ChangeN/A
Market Cap60.67B
Analysts75.15
Price Target140.38 (28.55%)
Short Float %0.09%
Short Ratio0.43
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.69% |
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)1.38%
PT rev (3m)2.08%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)-2.2%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0.1%
Revenue NY rev (3m)0.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.13 | ||
| Fwd PE | 15.49 | ||
| P/S | 3 | ||
| P/FCF | 22.49 | ||
| P/OCF | 14.25 | ||
| P/B | 5.9 | ||
| P/tB | N/A | ||
| EV/EBITDA | 12.75 |
EPS(TTM)6.77
EY6.2%
EPS(NY)7.05
Fwd EY6.45%
FCF(TTM)4.86
FCFY4.45%
OCF(TTM)7.66
OCFY7.02%
SpS36.37
BVpS18.51
TBVpS-8.06
PEG (NY)N/A
PEG (5Y)2.45
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)14.05%
ROICexc(5y)13.36%
ROICexgc(3y)24.97%
ROICexgc(5y)24.38%
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 | 2.42 |
F-Score7
WACC7.75%
ROIC/WACC1.6
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 Year0.13%
Revenue Next 2Y1.5%
Revenue Next 3Y2.5%
Revenue Next 5Y3.85%
EBIT growth 1Y-3.52%
EBIT growth 3Y7.27%
EBIT growth 5Y7.63%
EBIT Next Year10.13%
EBIT Next 3Y6.69%
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%