DEODiageo plc
Is the business good?
The checks split: nothing decisive, though returns that lean on debt.
Operating profit is mostly backed by cash. Conversion is worsening vs a year ago.
Leverage-amplified, a high assets-to-equity ratio does much of the work. ROE 48% = margin × turnover × leverage.
Where this answer is blind. The F-score rewards improvement, so an already-elite company can score mid-pack.
How good a business is DEO?
Diageo plc earns 15% on the capital it employs against a 9.0% cost of capital, so the business is worth more the bigger it gets.
Return on invested capital · cost of capital 9.0% · 6.1 points above what the capital costs: growth creates value
- Operating margin
- 20%
Operating margin · Consumer Defensive median 8.1% · fiscal year to FY2023
- Cash conversion
- 0.82×
Cash conversion · 1.17× a year ago · most of the operating profit arrived as cash, working capital took the rest
- Share count, year on year
- −2.3%
Share count, year on year · bought back, each share owns more of the company
| Year | Operating margin |
|---|---|
| FY2020 | 12% |
| FY2021 | 19% |
| FY2022 | 20% |
| FY2023 | 20% |
Details›
- Gross marginfiscal year to FY2023
- 43%
- Operating marginfiscal year to FY2023
- 20%
- Net marginfiscal year to FY2023
- 16%
- R&D as % of revenue
- 0.23%
- Revenue, trailing twelve months
- $23.5B
- Net income, trailing twelve months
- $3.77B
- Return on invested capitaloperating profit after tax ÷ debt + equity − cash
- 15%
Margins, capital and share counts from the statements as filed with the SEC; cash conversion is operating cash flow over operating profit after tax.