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Diageo PLC DEO

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Diageo on Track in Fiscal 2021 as Buyback Program Is Reinstated

Analyst Note

| Philip Gorham, CFA, FRM |

Although it gave little away in terms of detail, Diageo confirmed that it is on course to meet our full-year expectations, which implies that the markets that are reopening are experiencing fairly high on-trade demand. Management expects operating profit to grow 14% in fiscal 2021 (ending June), bang in line with our forecast. With some markets yet to fully reopen, however, and given the evident pent-up demand for social occasions, we are raising our estimates slightly for fiscal 2022. With the growth engines almost fully lit, the GBP 4.5 billion share-repurchase program, announced in 2019 but paused at the onset of COVID-19, will resume. Management plans to repurchase GBP 500 million by November 2021 and GBP 1 billion by the end of fiscal 2022. We had already modeled the reinstatement of the repurchase program and in fact would not be surprised if repurchases exceeded GBP 1 billion by the end of fiscal 2022. 

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Company Profile

Business Description

The product of a merger between Grand Metropolitan and Guinness in 1997, Diageo is the world's leading producer of branded premium spirits. It also produces and markets beer and wine. Brands include Johnnie Walker blended scotch, Smirnoff vodka, Crown Royal Canadian whiskey, Captain Morgan rum, Tanqueray gin, Baileys Irish Cream, and Guinness stout. Diageo also owns 34% of premium champagne and cognac maker Moet Hennessy, a subsidiary of French luxury-goods maker LVMH Moet Hennessy-Louis Vuitton, and a near-55% stake in India's United Spirits.

Contact
Lakeside Drive, Park Royal
London, NW10 7HQ, United Kingdom
T +44 2089786000
Sector Consumer Defensive
Industry Beverages - Wineries & Distilleries
Most Recent Earnings Jun 30, 2008
Fiscal Year End Jun 30, 2021
Stock Type
Employees 27,788

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