DGEAF - Diageo: Not As Bad As It's Made Out To Be
2024-03-16 08:42:57 ET
Summary
- DEO has underperformed global staple stocks over the past 6 months, mainly on account of challenges in the LAC region.
- The organic sales runrate in H2 will be much better than H1, whilst sustainable productivity benefits should reflect well on the cost base through FY27.
- The stock is already yielding an above par FCF figure, and this could get another leg-up on account of inventory-related developments.
- DEO is cheaply valued, and looks like one of the international dividend achievers that could benefit from some rotational interest, as the risk-reward on the standalone chart looks favorable too.
Underwhelming Performance
The ADR of Diageo, PLC ( DEO ), one of the top three players in the total beverage market, and the leader in the International Spirits category has proven to be a disappointment of sorts off late. Over the past 6 months, whilst other global consumer staple stocks have managed to eke out steady returns of over 3% on average, DEO has lost ground, giving up 6% of its value....
Diageo: Not As Bad As It's Made Out To Be