Diageo PLC (DEO) Executive Summary

Diageo exhibits strong revenue stability and solid profitability margins, supported by strategic capital allocations and favorable industry positioning.

Financial Highlights

The company reported a revenue of $15.2B for the latest fiscal year, with a net income of $3.1B. Trailing-12-month totals show consistent performance, emphasizing resilience amidst market fluctuations.

Diluted EPS stood at £1.75, and revenue per share was £2.35. Over the past 3 years, revenue CAGR was 4.2%, while EPS CAGR reached 5.8%.

Profitability and Margins

Gross margin: 55%, with a positive trend over three years
Operating margin: 25%
Net margin: 20%

Earnings Quality and Capital Allocation

Free cash flow for the fiscal year was $2.2B, with a cash conversion ratio of 95%. The company maintained disciplined capital allocation, with capex of $450M, dividends of $1.1B, and share buybacks totaling $700M, representing 64% of FCF.

Valuation and Industry Position

The current Price-to-Earnings (PE) ratio is 24.5, compared to a 3-year average of 22.8. Revenue composition is diversified globally, with North America representing 35% and Emerging Markets accounting for 25%.

See revenue breakdown chart for a detailed view.

Key Findings: Diageo shows stable revenue growth, robust profitability margins, and effective capital deployment, positioning it well for continued shareholder value creation amidst industry challenges.

DIAGEO PLC