Diageo (DEO) AI Stock Analysis

• Market Cap: $52.63B
• Dividend Yield: 4.8%
• Average Volume (3M): 1.54M
• Price to Earnings (P/E): 22.4
• Beta (1Y): 0.52
• 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: 556,609,700
• 10 Day Avg. Volume: 1,398,184
• 30 Day Avg. Volume: 1,540,441
• 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: 1.48
• Enterprise Value/Revenue: 3.83
• Enterprise Value/Gross Profit: 6.38
• Enterprise Value/Ebitda: 15.82
• 1Y Price Target: $76.01
• Price Target Upside: -22.42% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: $105.00 ▲(7.18% Upside)
• 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

Brand portfolio & global distribution

Diageo's diversified brand portfolio and multi-route distribution provide durable competitive advantages: global scale, category breadth and route-to-market flexibility support resilience to local shocks, enable premiumization strategies and sustain margins through procurement and marketing efficiencies over years.

Sustained revenue growth

Consistent high single-digit/teens revenue growth reflects rising demand, pricing power and portfolio execution. Over 2-6 months this signals healthy top-line momentum that funds marketing, innovation and geographic investment, supporting long-term market share retention and premium segment expansion.

Management ownership & governance alignment

Insider purchases and modest, stable use of long-term incentive plans indicate management alignment with shareholders and limited dilution. This governance posture supports consistent strategic execution and reduces agency risk, improving credibility for long-term capital allocation decisions.

Negative Factors

High leverage

A 2.20 debt/equity ratio signals significant leverage that constrains financial flexibility. Over time this raises interest expense sensitivity, limits capacity for bolt-on M&A or aggressive buybacks, and increases refinancing and covenant risk if margins or cash flows weaken.

Margin compression

Substantial margin decline reflects rising input, distribution or promotional costs and weaker price/mix. Persistent margin pressure erodes return on capital and limits reinvestment capacity, making profitability recovery key to sustaining dividends and deleveraging over the medium term.

Weakened cash generation

A >50% drop in free cash flow and low operating cash conversion reduce headroom for capex, debt paydown and shareholder distributions. Persistently weaker cash generation impairs strategic optionality and increases reliance on external funding during downturns, raising long-term financial risk.

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

Diageo Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 97.97
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEO, the sentiment is Positive. The current price of 97.97 is above the 20-day moving average (MA) of 95.60, above the 50-day MA of 91.25, and above the 200-day MA of 97.81, indicating a bullish trend. The MACD of 2.28 indicates Negative momentum. The RSI at 62.92 is Neutral, neither overbought nor oversold. The STOCH value of 67.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DEO.

Diageo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ABEV	80 Outperform	$48.78B	17.16	17.42%	8.22%	-0.68%	4.29%
BUD	68 Neutral	$157.54B	22.82	8.29%	1.83%	-2.06%	21.03%
STZ	67 Neutral	$27.10B	24.64	14.29%	2.92%	-5.57%	119.49%
BF.A	64 Neutral	$13.70B	17.41	20.67%	3.41%	-4.59%	-19.19%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
BF.B	62 Neutral	$13.70B	17.17	20.67%	3.42%	-4.59%	-19.19%
DEO	60 Neutral	$52.63B	22.36	22.33%	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.

Diageo Announces November 2025 Corporate Shareholding Updates

In November 2025, Diageo plc made several announcements regarding its corporate activities. On November 3, the company reported its total voting rights and capital, noting that as of October 31, 2025, it had 2,432,425,480 ordinary shares issued, with 206,023,016 held in treasury. This left 2,226,402,464 voting rights available for shareholders. On November 10, Sir John Manzoni, the Chair, purchased shares under a company arrangement, and on the same day, transactions related to the Diageo 2001 Share Incentive Plan were disclosed, involving Nik Jhangiani, Interim CEO, and Ewan Andrew, a member of the Executive Committee. These transactions reflect ongoing corporate governance and shareholding adjustments within Diageo.

The most recent analyst rating on (DEO) stock is a Hold with a $96.00 price target. To see the full list of analyst forecasts on Diageo stock, see the DEO Stock Forecast page.