Diageo (DEO) AI Stock Analysis

• Market Cap: $43.25B
• Dividend Yield: 4.8%
• Average Volume (3M): 2.09M
• Price to Earnings (P/E): 6.0
• Beta (1Y): 0.59
• Revenue Growth: 0.22%
• EPS Growth: -38.76%
• Country: US
• Employees: 30,092
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Beverages - Wineries & Distilleries
• EPS (TTM): 3.80
• Shares Outstanding: 556,613,040
• 10 Day Avg. Volume: 2,326,101
• 30 Day Avg. Volume: 2,085,473
• PEG Ratio: -0.61
• Price to Book (P/B): 5.05
• Price to Sales (P/S): 2.77
• P/FCF Ratio: 20.86
• Enterprise Value/Market Cap: 1.12
• Enterprise Value/Revenue: 2.83
• Enterprise Value/Gross Profit: 4.76
• Enterprise Value/Ebitda: 11.28
• 1Y Price Target: $107.50
• Price Target Upside: 24.23% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 6.44
• Revenue Forecast (FY): $19.57B

• Rating: 60 Neutral
• Price Target: $81.00 ▼(-6.39% Downside)
• Action: Reiterated Date: 11/07/25
• Date: Action: Reiterated 11/07/25

Diageo's overall stock score is primarily influenced by its financial performance and valuation. While the company shows strong revenue growth, challenges in profitability and leverage are significant concerns. The technical analysis indicates bearish momentum, which could impact short-term performance. The valuation is fair, with an attractive dividend yield, providing some support to the stock score.

Positive Factors

Revenue Growth

Diageo's reported 18.3% revenue growth reflects durable end-market demand and successful brand execution across regions. Sustained top-line expansion supports reinvestment in premiumization, funds marketing and capex, and underpins long-term cash generation and scale economics.

Diversified Global Portfolio

Ownership of a broad global portfolio across spirits, beer and RTD and mixed route-to-market lowers exposure to any single geography or channel. This diversification supports pricing power, procurement scale, and resilience to regional demand shocks over the medium term.

Cash Conversion

A FCF/Net Income of 0.62 and OCF/Net Income of 0.40 indicate Diageo converts a meaningful portion of accounting profit into cash. That durable cash conversion capacity helps sustain dividends, working capital needs and targeted reinvestment even under cyclical pressures.

Negative Factors

Margin Compression

The drop in net margin from 19.1% to 11.6% signals sustained profitability pressure, likely from cost inflation, higher excise or promotional intensity. Prolonged margin erosion weakens operating leverage, reduces cash available for debt reduction and strategic investments.

High Leverage

A debt-to-equity ratio around 2.20 denotes elevated indebtedness and higher fixed financing obligations. This constrains financial flexibility for M&A, capex or aggressive buybacks and increases refinancing and interest-rate sensitivity in adverse macro scenarios.

Falling Free Cash Flow

A 51.8% decline in free cash flow materially reduces internal funding for dividends, deleveraging and growth initiatives. If this decline persists, management may need to prioritize cash allocation or increase external financing, which impairs long-term strategic flexibility.

Diageo Business Overview & Revenue Model

Company Description

Diageo plc, together with its subsidiaries, produces, markets, and sells alcoholic beverages. The company offers scotch, whisky, gin, vodka, rum, ready to drink products, raki, liqueur, wine, tequila, Canadian whisky, American whiskey, cachaca, and brandy, as well as beer, including cider and non-alcoholic products. It provides its products under the Johnnie Walker, Crown Royal, Bulleit and Buchanan's whiskies, Smirnoff, Cîroc and Ketel One vodkas, Casamigos, DeLeon and Don Julio tequilas, Captain Morgan, Baileys, Tanqueray, and Guinness brands. The company operates in North America, Europe, Turkey, Africa, Latin America, the Caribbean, the Asia Pacific, and internationally. The company was incorporated in 1886 and is headquartered in London, the United Kingdom.

How the Company Makes Money

Diageo makes money primarily by selling alcoholic beverages under its brand portfolio to customers such as wholesalers, distributors, retailers, bars/restaurants, and other on-premise operators. Revenue is generated from the sale of finished goods across key categories (notably spirits, as well as beer and ready-to-drink offerings), with pricing and product mix influenced by brand positioning, package sizes, and premiumization (shifting consumer demand toward higher-priced offerings). The company’s earnings are driven by (1) volume of cases sold, (2) net pricing (including list prices, discounts, and promotional spend), and (3) geographic/channel mix across on-trade (bars/restaurants) and off-trade (retail) sales. Diageo typically sells through a combination of route-to-market models: in some countries it uses third-party distributors and wholesalers who purchase product and resell it onward; in others it operates more direct sales/distribution arrangements, capturing margin while bearing more logistics and commercial costs. Profitability is supported by brand-led marketing, economies of scale in production and procurement, and supply chain management, while being affected by input costs (agricultural commodities, glass, energy), foreign exchange movements, excise taxes, and local regulatory restrictions on alcohol advertising, pricing, and distribution. Significant partnerships or specific contractual arrangements contributing to earnings: null.

Diageo Financial Statement Overview

Summary

Diageo shows strong revenue growth but faces challenges in profitability and leverage. The decline in free cash flow is concerning, potentially affecting future investments. Overall, the company has growth potential but needs to address profitability and leverage to enhance financial stability.

Income Statement

Diageo has shown a strong revenue growth rate of 18.3% in the latest year, indicating robust sales performance. However, the net profit margin has decreased from 19.1% to 11.6%, suggesting a decline in profitability. The EBIT and EBITDA margins have also contracted, pointing to increased operational costs or pricing pressures.

Balance Sheet

The company maintains a high debt-to-equity ratio of 2.20, which indicates significant leverage and potential financial risk. Return on equity has decreased to 21.2%, reflecting reduced profitability relative to shareholder equity. The equity ratio remains stable, suggesting a balanced asset structure.

Cash Flow

Free cash flow has declined significantly by 51.8%, which could impact future investment capabilities. The operating cash flow to net income ratio is 0.40, indicating moderate cash generation relative to earnings. The free cash flow to net income ratio is 0.62, showing a reasonable conversion of profits into cash.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	17.16B	20.25B	20.27B	20.55B	15.45B	12.73B
Gross Profit	10.20B	12.17B	12.20B	12.27B	9.48B	7.70B
EBITDA	4.31B	6.36B	7.24B	8.06B	4.93B	4.28B
Net Income	1.90B	2.35B	3.87B	4.45B	3.94B	2.66B
Balance Sheet
Total Assets	37.31B	49.32B	45.47B	44.88B	36.52B	31.95B
Cash, Cash Equivalents and Short-Term Investments	2.00B	2.65B	1.13B	1.81B	2.54B	2.87B
Total Debt	17.96B	24.40B	21.50B	20.79B	16.02B	14.73B
Total Liabilities	27.15B	36.14B	33.40B	33.17B	27.00B	23.52B
Stockholders Equity	8.61B	11.09B	10.03B	9.86B	7.80B	6.90B
Cash Flow
Free Cash Flow	2.14B	2.69B	4.55B	4.33B	2.84B	3.03B
Operating Cash Flow	3.58B	4.30B	6.07B	5.74B	3.94B	3.65B
Investing Cash Flow	-1.40B	-1.72B	-1.59B	-1.43B	-1.34B	-1.09B
Financing Cash Flow	-1.48B	-1.49B	-3.11B	-3.04B	-3.26B	-2.79B

Diageo Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 86.53
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEO, the sentiment is Negative. The current price of 86.53 is below the 20-day moving average (MA) of 88.25, below the 50-day MA of 90.28, and below the 200-day MA of 95.95, indicating a bearish trend. The MACD of -4.14 indicates Positive momentum. The RSI at 30.32 is Neutral, neither overbought nor oversold. The STOCH value of 8.84 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DEO.

Diageo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ABEV	80 Outperform	$44.35B	12.14	16.90%	8.22%	-0.68%	4.29%
BUD	68 Neutral	$144.82B	10.54	12.35%	1.83%	-2.06%	21.03%
STZ	67 Neutral	$26.04B	11.96	15.12%	2.92%	-5.57%	119.49%
BF.A	65 Neutral	$10.84B	12.09	19.93%	3.41%	-4.59%	-19.19%
BF.B	63 Neutral	$10.84B	12.09	19.93%	3.42%	-4.59%	-19.19%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
DEO	60 Neutral	$43.25B	6.03	19.40%	4.80%	0.22%	-38.76%

Diageo Corporate Events

Diageo Details Director Share Purchases and Confirms Voting Capital Structure in January 2026 Filings

In January 2026, Diageo reported a series of routine governance and capital-market disclosures, including director and senior management share dealings, voting capital figures and updates on employee and long‑term incentive share schemes. On 30 December 2025, Executive Committee member Dayalan Nayager purchased 28,960 Diageo ordinary shares on the London Stock Exchange, while on 12 January 2026 chair Sir John Manzoni also acquired shares under an arrangement with the company, signalling continued insider alignment with shareholders. As of 31 December 2025, Diageo’s issued share capital comprised 2.43 billion ordinary shares, of which around 206 million were held in treasury, leaving approximately 2.23 billion voting rights in the market, a key reference figure for investors monitoring disclosure thresholds. The group’s six‑monthly block listing review for the period from 1 July to 31 December 2025 showed minimal activity in its Associated Companies Share Incentive Plan and a modest drawdown under the Diageo 2014 Long Term Incentive Plan, indicating stable use of equity-based compensation without significant dilution for existing shareholders.

The most recent analyst rating on (DEO) stock is a Buy with a $127.00 price target. To see the full list of analyst forecasts on Diageo stock, see the DEO Stock Forecast page.

Diageo Details December 2025 Voting Rights and Senior Executive Share Dealings

In December 2025, Diageo reported that as of 30 November 2025 its issued share capital comprised 2,432,425,480 ordinary shares, of which 206,012,972 were held in treasury, leaving 2,226,412,580 voting rights in circulation for regulatory disclosure purposes. Over the same month, the company disclosed several governance and shareholding developments: non-executive director Melissa Bethell took on an additional listed-company role as a non-executive director at The Magnum Ice Cream Company N.V., including chairing its remuneration committee and joining its audit committee from 8 December 2025, while Diageo’s interim CEO Nik Jhangiani, board chair Sir John Manzoni and other senior executives made small share purchases and awards under company share plans, signalling continued alignment of top management with shareholders as part of routine regulatory disclosures under UK market rules.

The most recent analyst rating on (DEO) stock is a Hold with a $1850.00 price target. To see the full list of analyst forecasts on Diageo stock, see the DEO Stock Forecast page.