Analyst Note
| Philip Gorham, CFA, FRM |Diageo reported fiscal 2020 preliminary results that were bang in line with our estimates. Both full-year organic sales, down 8.7%, and adjusted earnings per share, down 16% to 109.4p, were exactly in line with our forecasts, but like the brewers that have already reported results to the end of June, volumes were a whisker better and margins a touch worse than our expectations. We suspect that the distillers will suffer more than most other consumer staples manufacturers from the social distancing measures that continue to disrupt the on-trade, though we take comfort that this in-line report indicates the situation is no worse than we had modeled. We retain our conviction in our wide economic moat rating and GBX 2,600 fair value estimate. Diageo's bull run is over for the time being, and we regard the stock as being fairly valued.