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Diageo

DEO
46
Beverages - Wineries & Distilleries · Consumer Defensive
Price
$84.00
-1.48 (-1.73%)
Market Cap
$46.70B
Exchange
New York Stock Exchange
Winston Score
46
Winston is serious
Mixed quality — meaningful strengths and weaknesses.

Share count falling — buybacks

5.0% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 586.3M (2021) → 557.0M (2025)

Diageo is one of the world's largest producers of alcoholic beverages. It owns a massive portfolio of well-known spirits, beer, and wine brands, including Johnnie Walker Scotch whisky, Guinness stout, Smirnoff vodka, Captain Morgan rum, and Tanqueray gin. The company sells to bars, restaurants, retailers, and individual consumers across more than 180 countries.

Diageo makes money by producing and selling its branded drinks at a premium, keeping roughly 60 cents of gross profit on every dollar of revenue. It is headquartered in London and generates sales across North America, Europe, Africa, Latin America, and Asia Pacific, with no single region dominating entirely. Its main competitive advantage is its deep library of iconic, hard-to-replicate brand names built over decades. The biggest risk the company faces is slowing consumer demand for alcohol, particularly among younger generations who are drinking less than previous ones.

Winston Score History

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Growth Profile

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+1.3% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

-50.0% YoY

YoY Growth Rate

Earnings declining

R&D Spend

$0/ year

0.0% of revenue

Below sector average (2%)

Research and development spending

Insider Activity

0.0%ownership

Relatively low insider ownership

Cash Position

Cash flow positive

$8.7B cash & investments

Quarterly Free Cash Flow

→ Burn rate stable

Company generates more cash than it spends — no dilution risk from fundraising

Growth context

Diageo is growing revenue at 1% year-over-year. The Winston Score measures business quality today — these growth metrics show what could matter tomorrow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin
58.2%
Premium pricing power — 58.2% gross margin
Operating Margin
23.0%
Excellent — 23.0% operating margin
ROCE
6.2%
Weak — 6.2% return on capital

ROIC between 5% and 15%. They earn 5 to 15 cents back per year on every dollar invested.

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Growth

Sales YoY
+14.5%
Fast-growing sales (14.5% YoY)
EPS YoY
-25.6%
Earnings shrinking (-25.6% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency
0/8 quarters
Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion
173%
Turns 173% of profit into real cash
FCF Margin
18.0%
Converts sales into free cash efficiently (18.0%)

FCF margin between 10% and 20%. Every $100 in sales becomes $10 to $20 in real cash.

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Stability

Debt / Equity
2.14
Heavy debt load (2.14)
Interest Cover
6.23x
Adequate interest coverage (6.2x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

P/E Ratio (TTM)
9.0x
Attractive valuation — P/E 9.0

P/E under 10. The price tag is small relative to last year's profit.

P/E vs Forward
-6.9
SLOWING
Earnings expected to fall — forward P/E higher than today

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Dividends

Dividend Yield
4.10%
Healthy income — 4.10% yield

Generous yield. Worth checking whether the payout is sustainable.

Dividend Growth
-4.8%
Dividend cut (-4.8% YoY) — warning sign

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