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Is this Large Market Cap Stock target price reasonable for Diageo plc (NYSE:DEO)?

The company in question is, Diageo plc (NYSE:DEO) currently with a stock price of 113.88 (1.05% today). The market cap for Diageo plc is 71340.12, and is in the sector Consumer Goods, and Beverages – Wineries & Distillers industry. The target price for Diageo plc is 123.15. Currently Diageo plc is trading with a P/E of 24.13, and a forward P/E of 18.64. Average volume for Diageo plc is 820.54 and so far today it is 427000.

Performance in the last year for Diageo plc has been 7.16%. For EPS growth, Diageo plc has seen a growth of -5.80%, and is looking to grow in the next year to 11.09%. More long term stats show that EPS growth has been 3.20% over the last five years and could be 6.80% for the next five years. Diageo plc has seen sales growth quarter over quarter at 12.80%, with EPS growth quarter over quarter at 31.40%. The 20-day simple moving average is 0.60%, with the 200-day simple moving average coming to 6.09%.

Since the IPO date for Diageo plc on the 5/13/1996, Diageo plc has seen performance year to date to be 7.53%. With Diageo plc trading at 113.88, the dividend yield is 3.38%, and the EPS is 4.72.

So could Diageo plc, be undervalued? Well as said before P/E is 24.13. The PEG is 3.55, P/S is 5.14 and the P/B is at 6.33. The P/cash is 34.02, with P/free cash flow at 89.97.

Diageo plc ability to deal with debt shows that the current ratio is 1.4, and the quick ratio is 0.7. This is with long term debt/equity at 1, and total debt/equity at 1.28.

In terms of margins, Diageo plc has a gross margin of 59.50%, an operating margin of 28.30% and a profit margin of 21.40%.Payout ratio for Diageo plc is 66.20%. Return on assets come to 8.20% with return on investment coming to 13.10%.

Insider ownership for Diageo plc, is at 0.70% and institutional ownership comes to 12.30%. Outstanding shares are at 626.45. While shares float is 625.78. The float short is currently 0.39%, and short ratio is 2.96.

Disclaimer: Remember there is a risk to your investment, this is not a recommendation, nor personal advice, never invest more than you are able too loose.

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Stephen Butters

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