Stock of the Day

September 1, 2021

Diageo (DEO)

$114.16
+$0.19 (+0.2%)
Market Cap: $63.51B

About Diageo

Diageo plc, together with its subsidiaries, engages in the production, marketing, and sale of alcoholic beverages. The company offers scotch, gin, vodka, rum, raki, liqueur, wine, tequila, Chinese white spirits, cachaça, and brandy, as well as beer, including cider and flavored malt beverages. It also provides Chinese, Canadian, Irish, American, and Indian-Made Foreign Liquor whiskies, as well as flavored malt beverages, ready to drink, and non-alcoholic products. The company provides its products under the Johnnie Walker, Crown Royal, J&B, Buchanan's, Smirnoff, Cîroc, Ketel One, Captain Morgan, Baileys, Don Julio, Casamigos, Tanqueray, Guinness, Shui Jing Fang, Yenì, McDowell's, Don Papa, Aviation American, Seagram, Seagram's 7 Crown, Zacapa, Black Dog, Black & White, Signature, Royal Challenge, Godawan, Antiquity, Gordon's, Old Parr, Windsor, Bundaberg, Ypióca, Bulleit, and Bell's brand names. It operates in the United States, the United Kingdom, Türkiye, Australia, Korea, India, Greater China, Brazil, Mexico, South Africa, Nigeria, and internationally. The company was incorporated in 1886 and is headquartered in London, the United Kingdom.

Diageo Bull Case

Here are some ways that investors could benefit from investing in Diageo plc:

  • Diageo plc's stock price recently increased to $110.54, indicating positive market sentiment and potential for further growth.
  • The company has a strong market capitalization of approximately $61.49 billion, reflecting its stability and significant presence in the alcoholic beverage industry.
  • Diageo plc declared a semi-annual dividend of $1.62, providing a dividend yield of 3.8%, which can be attractive for income-focused investors.
  • Recent upgrades from analysts, including a shift from "sell" to "buy" ratings, suggest growing confidence in the company's future performance.
  • The company has a relatively low beta of 0.66, indicating that its stock is less volatile compared to the overall market, which can be appealing for risk-averse investors.

Diageo Bear Case

Investors should be bearish about investing in Diageo plc for these reasons:

  • Despite recent positive developments, one analyst has rated the stock with a "sell" rating, indicating some skepticism about its future performance.
  • The price-to-earnings (P/E) ratio of 16.14, while reasonable, may suggest that the stock is fully valued, limiting potential upside for new investors.
  • Institutional ownership is at 8.97%, which may indicate a lack of confidence from larger investors in the stock's growth potential.
  • Diageo plc's PEG ratio of 2.39 suggests that the stock may be overvalued relative to its earnings growth rate, which could deter growth-oriented investors.
  • Market fluctuations and economic uncertainties can impact consumer spending on premium alcoholic beverages, potentially affecting Diageo's sales and profitability.

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