Stock of the Day

September 1, 2021

Diageo (DEO)

$115.39
-$0.36 (-0.3%)
Market Cap: $64.19B

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:

  • The current stock price is around $110, which may present a buying opportunity for investors looking for value in the beverage sector.
  • Diageo plc has a strong market capitalization of approximately $61 billion, indicating a solid position in the industry and potential for growth.
  • The company recently announced a semi-annual dividend of $1.62 per share, providing a dividend yield of about 3.8%, which can be attractive for income-focused investors.
  • Analysts have a consensus rating of "Hold" with several upgrades, suggesting that there is confidence in the company's stability and potential for future performance.
  • Diageo plc has a diverse portfolio of alcoholic beverages, including popular brands, which can help mitigate risks associated with market fluctuations.

Diageo Bear Case

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

  • The stock has experienced a decline of about 0.7% recently, which may indicate short-term volatility and investor uncertainty.
  • Diageo plc has a debt-to-equity ratio of 1.62, suggesting that the company relies significantly on debt financing, which can be a risk if market conditions change.
  • With a P/E ratio of 16.14, some investors may find the stock overvalued compared to its earnings, which could limit upside potential.
  • The company has a quick ratio of 0.67, indicating potential liquidity issues, as it may not have enough short-term assets to cover its short-term liabilities.
  • Recent market trends show increased competition in the beverage industry, which could impact Diageo's market share and profitability moving forward.

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