Start here if you're new
what it is
Diageo sells the liquor and beer brands you already know, then collects cash every time people reorder the familiar label.
how it gets paid
Last year Deo made $28.0B in revenue. Rum and Liqueurs was the main engine at $8.0B, or 28% of sales.
why it's growing
Revenue grew 0.3% last year. While organic volume has grown, indicating that consumers are still purchasing products, overall demand has been tempered by a decline in price/mix.
what just happened
Latest results were messy: revenue fell to $14.9B while EPS still rose to $0.89.
At a glance
A balance sheet — strong enough to weather a downturn
85/100 earnings predictability — you can trust these numbers
20.4x trailing p/e — priced about right
5.3% dividend yield — cash in your pocket every quarter
13.5% return on capital — nothing to write home about
xvary composite: 64/100 — average
What they do
Diageo sells the liquor and beer brands you already know, then collects cash every time people reorder the familiar label.
This business wins because your bar order is often a habit, not a spreadsheet. Diageo owns labels like Johnnie Walker, Smirnoff, Baileys, Captain Morgan, and Guinness, and that brand pull helps support a 48.0% operating margin (operating margin → profit after running the business → almost half of each sales dollar survives the daily grind). You are not asking the bartender to freestyle a replacement when the bottle on the shelf already does the job.
How they make money
$28.0B
annual revenue · their business grew +0.3% last year
Scotch
$7.0B
flat
Vodka
$5.0B
dn
Beer
$4.5B
up
Tequila and Mezcal
$3.5B
dn
Rum and Liqueurs
$8.0B
flat
The products that matter
blended scotch whisky
Johnnie Walker
core premium brand
This page does not disclose brand sales, but Johnnie Walker sits inside a $28.0B portfolio that still earns a 17.0% net margin. That's what branded pricing power looks like in aggregate.
global label
cream liqueur
Baileys
repeat-purchase brand
You do not get a 48.0% operating margin from commodity products. You get it from brands retailers keep on shelf and consumers recognize instantly.
margin support
rum
Captain Morgan
portfolio breadth
The investment case is the collection, not one hero bottle. When revenue is up just 0.3%, portfolio breadth matters because one brand usually is not carrying the whole period.
portfolio depth
Key numbers
20.4x
trailing p/e
P/E → stock price divided by past earnings → you are paying 20.4 years of trailing profit for a company with projected earnings growth of just 2.0%.
48.0%
operating margin
Operating margin → profit after everyday business costs → Diageo keeps nearly half of sales after running the machine.
5.3%
dividend yield
Dividend yield → cash paid to you each year as a share of the stock price → the payout is doing a lot of the work while growth cools.
$20.8B
long-term debt
Debt → money the company owes → the balance sheet is still rated A, but $20.8B means this is not a zero-consequence slowdown.
Financial health
A
strength
- balance sheet grade A — very strong financial position
- risk rank 2 — safer than 80% of stocks
- price stability 90 / 100
- long-term debt $20.8B (29% of capital)
- net profit margin 17.0% — keeps 17 cents of every dollar in revenue
- return on equity 27% — $0.27 profit for every $1 investors have put in
A with balance sheet grade and risk rank standing out. your money faces less risk here than at most public companies.
Total return vs. market
You invested $10,000 in DEO 3 years ago → it's now worth $5,270.
The index would have given you $13,920.
source: institutional data · total return
What just happened
missed estimates
Latest results were messy: revenue fell to $14.9B while EPS still rose to $0.89.
That is the weird part. Sales fell 2% vs. prior year, but EPS rose 3%, which usually means cost control is doing more work than demand.
$14.9B
revenue
$0.89
eps
43.0%
gross margin
the number that mattered
The 2% revenue decline matters most because cost cuts can help for a quarter, but you cannot expense-cut your way to durable growth forever.
-
diageo plc has a new ceo.
-
effective january 1, sir dave lewis took the helm of diageo.sir dave spent the majority of his career at unilever, starting as a graduate trainee and rising to become global president for personal care. after 28 years at the consumer goods giant, he left to run supermarket chain tesco plc as group ceo, leading the retailer for six years.
-
the diageo leadership change is expected to have a positive impact on the alcoholic beverage producer, as sir dave will likely leverage his proven track record in turnaround situations, cost discipline, and innovate brand marketing.
-
diageo is scheduled to report interimyear 2026 results in early february.we expect sales for the december period to slip from $10.9 billion to $10.0 billion, and earnings to fall from $3.44 per adr to $3.00. recent demand for diageo’s products has been mixed, and this could be reflected in the interim results.
-
while organic volume has grown, indicating that consumers are still purchasing products, overall demand has been tempered by a decline in price/mix.
source: company earnings report, 2026
Get this snapshot in your inbox
This page, delivered free — plus weekly updates when the numbers change. plain english, no spam.
weekly updates
earnings alerts
plain english
no spam
What could go wrong
the setup is specific: if premium spirits demand stays soft, 0.3% revenue growth starts to look less like a pause and more like the business settling into low gear.
med
demand softness in premium spirits
Revenue rose 0.3% last year. For a brand portfolio this large, that is the warning sign. If consumers trade down or simply buy less, DEO stops looking like a quality compounder and starts looking like an income substitute.
slow demand pressures a $52B equity story
med
cost cuts doing the talking instead of growth
Management is targeting an extra $125M in cost savings to buffer macro and trade pressure. Useful, yes. But cuts are not demand. If profitability is being defended while sales stall, the multiple still compresses.
margin support helps now, but it does not fix 0.3% growth
med
trade noise returning to the story
The company said US-China tariffs had negligible direct impact. Good. The catch is that tariffs keep showing up in the conversation anyway, which means trade policy still hangs over sentiment across a $28.0B revenue base.
headline risk can hit the stock before it hits the income statement
med
yield support fading if it becomes the only reason to stay
A 5.3% dividend yield looks attractive. It also attracts shareholders who care more about payout stability than business acceleration. If the payout stops offsetting weak price action, support under the stock gets thinner.
three-year return already trails the index by $8,650 on a $10,000 start
These risks point to the same conclusion: DEO can stay financially sound and still be a disappointing stock if 0.3% growth turns into the default setting.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
revenue growth needs to do better than 0.3%
This is the cleanest tell. If sales stay flat while the stock asks for patience, you are really underwriting yield and stability, not business momentum.
calendar
next earnings commentary on demand versus cost control
You want to hear whether management talks more about brand demand or more about cost cuts. Those are very different stories.
risk
whether tariffs stay negligible or become a recurring explanation
Management said direct US-China exposure was negligible. If that language changes, the market notices before the income crowd does.
trend
institutional selling streak
Institutions have been net sellers for three straight quarters. That does not decide the case, but it tells you the biggest holders have not been eager to add while growth stays thin.
Analyst rankings
earnings predictability
85 / 100
in human-speak, analysts think this is a steady operator. You usually know roughly what you're going to get.
risk rank
2
safer than about 80% of stocks. That's why DEO can be boring without being ignored.
price stability
90 / 100
the stock usually moves less violently than the average name. Stable business, stable tape.
source: institutional data
Institutional activity
institutions have been net selling for 3 consecutive quarters — 319 buyers vs. 432 sellers in 3q2025. total institutional holdings: 56.6M shares. net selling for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$72
$139
$86
current price
$106
target midpoint · +23% from current · 3-5yr high: $165 (+90% · 21% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive