Diageo (DEO) AI Stock Analysis

• Market Cap: $49.51B
• Dividend Yield: 4.66%
• Average Volume (3M): 1.67M
• Price to Earnings (P/E): 20.8
• 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): 2.64
• Shares Outstanding: 556,600,600
• 10 Day Avg. Volume: 2,146,049
• 30 Day Avg. Volume: 1,667,060
• 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: 1.61
• Enterprise Value/Revenue: 3.93
• Enterprise Value/Gross Profit: 6.54
• Enterprise Value/Ebitda: 16.22
• 1Y Price Target: $109.50
• Price Target Upside: 11.77% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: $96.00 ▼(-2.01% Downside)

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.

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 generates revenue primarily through the sale of its alcoholic beverages, which include spirits and beer. The company's revenue model is built on a combination of direct sales to retailers and distributors, as well as through e-commerce channels. Key revenue streams include premium and super-premium spirits, which command higher price points and profit margins. Additionally, Diageo benefits from a strong brand portfolio, which allows it to leverage brand loyalty and pricing power. The company also engages in strategic partnerships and collaborations, enhancing its distribution capabilities and market reach. Factors contributing to its earnings include global market trends towards premiumization, increasing consumer demand for innovative products, and effective marketing strategies that bolster brand visibility and consumer engagement.

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	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	20.33B	20.25B	20.27B	20.55B	15.45B	12.73B
Gross Profit	12.22B	12.17B	12.20B	12.27B	9.48B	7.70B
EBITDA	4.93B	6.36B	7.24B	8.06B	4.93B	4.28B
Net Income	2.36B	2.35B	3.87B	4.45B	3.94B	2.66B
Balance Sheet
Total Assets	49.32B	49.32B	45.47B	44.88B	36.52B	31.95B
Cash, Cash Equivalents and Short-Term Investments	2.65B	2.65B	1.13B	1.81B	2.54B	2.87B
Total Debt	24.40B	24.40B	21.50B	20.79B	16.02B	14.73B
Total Liabilities	36.14B	36.14B	33.40B	33.17B	27.00B	23.52B
Stockholders Equity	11.09B	11.09B	10.03B	9.86B	7.80B	6.90B
Cash Flow
Free Cash Flow	3.60B	2.69B	4.55B	4.33B	2.84B	3.03B
Operating Cash Flow	5.22B	4.30B	6.07B	5.74B	3.94B	3.65B
Investing Cash Flow	-1.74B	-1.72B	-1.59B	-1.43B	-1.34B	-1.09B
Financing Cash Flow	-1.50B	-1.49B	-3.11B	-3.04B	-3.26B	-2.79B

Diageo Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 97.97
• 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 97.97 is above the 20-day moving average (MA) of 93.02, above the 50-day MA of 94.04, and below the 200-day MA of 102.36, indicating a bearish trend. The MACD of -1.12 indicates Positive momentum. The RSI at 38.13 is Neutral, neither overbought nor oversold. The STOCH value of 14.03 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	$39.62B	13.72	15.97%	7.06%	-0.68%	4.29%
BUD	75 Outperform	$121.03B	16.86	8.97%	1.93%	-2.06%	21.03%
BF.B	70 Outperform	$12.85B	15.27	22.65%	3.32%	-3.34%	-14.19%
BF.A	68 Neutral	$12.85B	15.15	22.65%	3.35%	-3.34%	-14.19%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
DEO	60 Neutral	$49.51B	20.83	22.33%	4.66%	0.22%	-38.76%
STZ	57 Neutral	$22.50B	18.87	15.91%	3.12%	-5.57%	119.49%

Diageo Corporate Events

Diageo Appoints John Rishton to Board as Non-Executive Director

On September 16, 2025, Diageo announced the appointment of John Rishton as a Non-Executive Director, effective November 1, 2025. Rishton brings over 40 years of business experience, having held executive roles at major companies such as Rolls Royce Group and British Airways. His appointment is expected to strengthen Diageo’s board with his extensive experience in consumer and retail businesses, contributing to the company’s sustainable growth and shareholder value.

Diageo Releases 2025 Annual Report and Form 20-F

On August 14, 2025, Diageo plc announced the publication of its Annual Report and Form 20-F for the fiscal year ending June 30, 2025. These documents, which include the company’s audited financial statements, have been filed with the United States Securities and Exchange Commission and are accessible on Diageo’s website. The release of these documents provides stakeholders with crucial insights into the company’s financial performance and strategic direction for the past year.

Diageo Releases 2025 Annual Report Highlighting Strategic Growth

On August 14, 2025, Diageo plc released its Annual Report for 2025, highlighting the company’s financial performance and strategic initiatives. This report provides insights into Diageo’s operations, industry positioning, and potential implications for stakeholders, reflecting the company’s ongoing commitment to growth and market leadership.