Stock of the Day

September 1, 2021

Diageo (DEO)

$114.70
+$1.58 (+1.4%)
Market Cap: $63.81B

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 $113, showing a recent increase, which may indicate positive market sentiment towards the company.
  • Diageo plc has received multiple upgrades from analysts, with a consensus price target of $129, suggesting potential for further price appreciation.
  • The company has a strong market capitalization of over $63 billion, indicating stability and a solid position in the industry.
  • Recent institutional investments, including a significant increase in stake by First Trust Advisors LP, reflect confidence from large investors in Diageo's future performance.
  • Diageo's diverse portfolio of premium brands positions it well to capitalize on market trends and consumer preferences, enhancing its growth potential.

Diageo Bear Case

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

  • Some institutional investors, like Integrated Wealth Concepts LLC, have reduced their stakes, which may signal concerns about the company's short-term performance.
  • The stock has experienced volatility, with a twelve-month high of $144.27 and a low of $100.72, indicating potential risks associated with price fluctuations.
  • Diageo's debt-to-equity ratio is relatively high at 1.62, suggesting that the company relies significantly on debt financing, which could pose risks in a rising interest rate environment.
  • Despite recent upgrades, one analyst has rated the stock as a sell, indicating that there are differing opinions on its future performance.
  • The company's quick ratio of 0.67 suggests potential liquidity concerns, as it indicates that Diageo may not have enough short-term assets to cover its short-term liabilities.

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