DIAGEO PLC-SPONSORED ADR (DEO)
US25243Q2057 - ADR
We assign a fundamental rating of 5 out of 10 to DEO. DEO was compared to 32 industry peers in the Beverages industry. While DEO has a great profitability rating, there are quite some 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.
Each year in the past 5 years DEO had a positive operating cash flow.
1.2 Ratios
The Return On Assets of DEO (8.68%) is better than 62.50% of its industry peers.
With an excellent Return On Equity value of 41.47%, DEO belongs to the best of the industry, outperforming 93.75% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 13.24%, DEO is in the better half of 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 12.59%.
| 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
With an excellent Profit Margin value of 19.47%, DEO belongs to the best of the industry, outperforming 84.38% 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 (29.53%) than 93.75% of its industry peers.
In the last couple of years the Operating Margin of DEO has remained more or less at the same level.
DEO's Gross Margin of 59.47% is amongst the best of the industry. DEO outperforms 87.50% of its industry peers.
DEO's Gross Margin has been stable in the last couple of years.
| 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
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.
The number of shares outstanding for DEO has been reduced compared to 5 years ago.
The debt/assets ratio for DEO is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 2.61 indicates that DEO is not a great score, but indicates only limited risk for bankruptcy at the moment.
DEO's Altman-Z score of 2.61 is in line compared to the rest of the industry. DEO outperforms 50.00% of its industry peers.
DEO has a debt to FCF ratio of 7.08. This is a slightly negative value and a sign of low solvency as DEO would need 7.08 years to pay back of all of its debts.
With a Debt to FCF ratio value of 7.08, DEO perfoms like the industry average, outperforming 53.13% 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.
Looking at the Debt to Equity ratio, with a value of 1.99, DEO is doing worse than 87.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.99 | ||
| Debt/FCF | 7.08 | ||
| Altman-Z | 2.61 |
ROIC/WACC1.75
WACC7.57%
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.
The Current ratio of DEO (1.58) is comparable to the rest of the industry.
A Quick Ratio of 0.65 indicates that DEO may have some problems paying its short term obligations.
Looking at the Quick ratio, with a value of 0.65, DEO is doing worse than 62.50% of the companies in the same industry.
| 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.
Looking at the last year, DEO shows a quite strong growth in Revenue. The Revenue has grown by 12.02% in the last year.
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 Q2Q%-6.61%
Revenue 1Y (TTM)12.02%
Revenue growth 3Y23.25%
Revenue growth 5Y12.59%
Sales Q2Q%-1.42%
3.2 Future
The Earnings Per Share is expected to grow by 0.88% on average over the next years.
Based on estimates for the next years, DEO will show a decrease in Revenue. The Revenue will decrease by -2.11% on average per year.
EPS Next Y0.06%
EPS Next 2Y2.03%
EPS Next 3Y3.08%
EPS Next 5Y0.88%
Revenue Next Year-5.16%
Revenue Next 2Y-1.14%
Revenue Next 3Y0.96%
Revenue Next 5Y-2.11%
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 17.47, the valuation of DEO can be described as rather expensive.
Based on the Price/Earnings ratio, DEO is valued cheaply inside the industry as 90.63% of the companies are valued more expensively.
DEO is valuated rather cheaply when we compare the Price/Earnings ratio to 24.41, which is the current average of the S&P500 Index.
DEO is valuated correctly with a Price/Forward Earnings ratio of 16.12.
Based on the Price/Forward Earnings ratio, DEO is valued a bit cheaper than 78.13% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.59, DEO is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 17.47 | ||
| Fwd PE | 16.12 |
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.
71.88% of the companies in the same industry are more expensive than DEO, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 24.26 | ||
| EV/EBITDA | 12.02 |
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)277.62
PEG (5Y)1.65
EPS Next 2Y2.03%
EPS Next 3Y3.08%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 3.09%, DEO has a reasonable but not impressive dividend 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 81.25% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.30, DEO pays a bit more dividend than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.09% |
5.2 History
On average, the dividend of DEO grows each year by 9.56%, which is quite nice.
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 2Y2.03%
EPS Next 3Y3.08%
DIAGEO PLC-SPONSORED ADR
NYSE:DEO (7/26/2024, 7:24:46 PM)
After market: 132.43 0 (0%)132.43
+1.74 (+1.33%)
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 Cap73.60B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.09% |
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)
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EPS beat(8)
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EPS beat(12)
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EPS beat(16)
Avg EPS beat(16)
Revenue beat(2)
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Min Revenue beat(2)
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Revenue beat(4)
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Revenue beat(8)
Avg Revenue beat(8)
Revenue beat(12)
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Revenue beat(16)
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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 | 17.47 | ||
| Fwd PE | 16.12 | ||
| 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)277.62
PEG (5Y)1.65
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)
High Growth Momentum
Growth
EPS 1Y (TTM)-6.67%
EPS 3Y21.44%
EPS 5Y
EPS Q2Q%
EPS Next Y0.06%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)12.02%
Revenue growth 3Y23.25%
Revenue growth 5Y
Sales 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