Intrinsic value of Diageo ADR - DEO

Previous Close

$142.00

  Intrinsic Value

$505.40

stock screener

  Rating & Target

str. buy

+256%

Previous close

$142.00

 
Intrinsic value

$505.40

 
Up/down potential

+256%

 
Rating

str. buy

We calculate the intrinsic value of DEO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 14.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.20
  2.48
  2.73
  2.96
  3.16
  3.35
  3.51
  3.66
  3.79
  3.92
  4.02
  4.12
  4.21
  4.29
  4.36
  4.42
  4.48
  4.53
  4.58
  4.62
  4.66
  4.69
  4.72
  4.75
  4.78
  4.80
  4.82
  4.84
  4.85
  4.87
Revenue, $m
  16,574
  16,985
  17,449
  17,965
  18,534
  19,154
  19,827
  20,552
  21,332
  22,168
  23,060
  24,010
  25,020
  26,093
  27,231
  28,436
  29,710
  31,057
  32,479
  33,980
  35,563
  37,232
  38,991
  40,844
  42,795
  44,849
  47,010
  49,284
  51,676
  54,192
Variable operating expenses, $m
  5,267
  5,356
  5,456
  5,568
  5,691
  5,826
  5,971
  6,129
  6,298
  6,479
  4,996
  5,201
  5,420
  5,653
  5,899
  6,160
  6,436
  6,728
  7,036
  7,361
  7,704
  8,066
  8,447
  8,848
  9,271
  9,716
  10,184
  10,677
  11,195
  11,740
Fixed operating expenses, $m
  6,386
  6,527
  6,671
  6,817
  6,967
  7,121
  7,277
  7,437
  7,601
  7,768
  7,939
  8,114
  8,292
  8,475
  8,661
  8,852
  9,046
  9,245
  9,449
  9,657
  9,869
  10,086
  10,308
  10,535
  10,767
  11,004
  11,246
  11,493
  11,746
  12,004
Total operating expenses, $m
  11,653
  11,883
  12,127
  12,385
  12,658
  12,947
  13,248
  13,566
  13,899
  14,247
  12,935
  13,315
  13,712
  14,128
  14,560
  15,012
  15,482
  15,973
  16,485
  17,018
  17,573
  18,152
  18,755
  19,383
  20,038
  20,720
  21,430
  22,170
  22,941
  23,744
Operating income, $m
  4,921
  5,102
  5,322
  5,580
  5,875
  6,208
  6,578
  6,986
  7,434
  7,921
  10,125
  10,695
  11,308
  11,966
  12,671
  13,424
  14,227
  15,083
  15,994
  16,962
  17,990
  19,080
  20,236
  21,461
  22,757
  24,129
  25,580
  27,114
  28,735
  30,448
EBITDA, $m
  7,064
  7,257
  7,490
  7,762
  8,073
  8,423
  8,813
  9,242
  9,711
  10,221
  10,774
  11,371
  12,013
  12,701
  13,438
  14,225
  15,064
  15,958
  16,909
  17,919
  18,991
  20,129
  21,335
  22,611
  23,963
  25,393
  26,905
  28,503
  30,191
  31,974
Interest expense (income), $m
  599
  745
  777
  813
  854
  899
  949
  1,003
  1,062
  1,126
  1,195
  1,268
  1,346
  1,430
  1,518
  1,613
  1,712
  1,818
  1,930
  2,048
  2,173
  2,305
  2,444
  2,591
  2,745
  2,908
  3,079
  3,259
  3,449
  3,649
  3,859
Earnings before tax, $m
  4,176
  4,326
  4,509
  4,726
  4,976
  5,259
  5,575
  5,924
  6,308
  6,726
  8,857
  9,349
  9,878
  10,448
  11,058
  11,711
  12,409
  13,153
  13,946
  14,789
  15,685
  16,636
  17,646
  18,716
  19,850
  21,050
  22,321
  23,665
  25,087
  26,589
Tax expense, $m
  1,128
  1,168
  1,218
  1,276
  1,344
  1,420
  1,505
  1,600
  1,703
  1,816
  2,391
  2,524
  2,667
  2,821
  2,986
  3,162
  3,350
  3,551
  3,765
  3,993
  4,235
  4,492
  4,764
  5,053
  5,359
  5,684
  6,027
  6,390
  6,773
  7,179
Net income, $m
  3,049
  3,158
  3,292
  3,450
  3,633
  3,839
  4,070
  4,325
  4,605
  4,910
  6,466
  6,824
  7,211
  7,627
  8,072
  8,549
  9,059
  9,602
  10,180
  10,796
  11,450
  12,144
  12,881
  13,663
  14,490
  15,367
  16,294
  17,276
  18,313
  19,410

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  40,524
  41,528
  42,663
  43,925
  45,315
  46,831
  48,476
  50,250
  52,157
  54,199
  56,380
  58,704
  61,175
  63,798
  66,579
  69,525
  72,640
  75,933
  79,410
  83,081
  86,952
  91,033
  95,334
  99,864
  104,634
  109,655
  114,940
  120,499
  126,348
  132,499
Adjusted assets (=assets-cash), $m
  40,524
  41,528
  42,663
  43,925
  45,315
  46,831
  48,476
  50,250
  52,157
  54,199
  56,380
  58,704
  61,175
  63,798
  66,579
  69,525
  72,640
  75,933
  79,410
  83,081
  86,952
  91,033
  95,334
  99,864
  104,634
  109,655
  114,940
  120,499
  126,348
  132,499
Revenue / Adjusted assets
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
  0.409
Average production assets, $m
  14,005
  14,352
  14,745
  15,181
  15,661
  16,185
  16,754
  17,367
  18,026
  18,732
  19,485
  20,288
  21,142
  22,049
  23,010
  24,028
  25,105
  26,243
  27,445
  28,713
  30,051
  31,461
  32,948
  34,513
  36,162
  37,897
  39,724
  41,645
  43,666
  45,792
Working capital, $m
  4,740
  4,858
  4,990
  5,138
  5,301
  5,478
  5,670
  5,878
  6,101
  6,340
  6,595
  6,867
  7,156
  7,463
  7,788
  8,133
  8,497
  8,882
  9,289
  9,718
  10,171
  10,648
  11,152
  11,681
  12,239
  12,827
  13,445
  14,095
  14,779
  15,499
Total debt, $m
  14,384
  15,052
  15,807
  16,646
  17,570
  18,579
  19,672
  20,853
  22,121
  23,479
  24,929
  26,474
  28,117
  29,862
  31,711
  33,670
  35,742
  37,931
  40,244
  42,685
  45,259
  47,973
  50,833
  53,845
  57,017
  60,357
  63,871
  67,568
  71,457
  75,548
Total liabilities, $m
  26,948
  27,616
  28,371
  29,210
  30,134
  31,143
  32,236
  33,417
  34,685
  36,043
  37,493
  39,038
  40,681
  42,426
  44,275
  46,234
  48,306
  50,495
  52,808
  55,249
  57,823
  60,537
  63,397
  66,409
  69,581
  72,921
  76,435
  80,132
  84,021
  88,112
Total equity, $m
  13,575
  13,912
  14,292
  14,715
  15,180
  15,688
  16,239
  16,834
  17,473
  18,157
  18,887
  19,666
  20,494
  21,372
  22,304
  23,291
  24,334
  25,438
  26,602
  27,832
  29,129
  30,496
  31,937
  33,454
  35,052
  36,734
  38,505
  40,367
  42,327
  44,387
Total liabilities and equity, $m
  40,523
  41,528
  42,663
  43,925
  45,314
  46,831
  48,475
  50,251
  52,158
  54,200
  56,380
  58,704
  61,175
  63,798
  66,579
  69,525
  72,640
  75,933
  79,410
  83,081
  86,952
  91,033
  95,334
  99,863
  104,633
  109,655
  114,940
  120,499
  126,348
  132,499
Debt-to-equity ratio
  1.060
  1.080
  1.110
  1.130
  1.160
  1.180
  1.210
  1.240
  1.270
  1.290
  1.320
  1.350
  1.370
  1.400
  1.420
  1.450
  1.470
  1.490
  1.510
  1.530
  1.550
  1.570
  1.590
  1.610
  1.630
  1.640
  1.660
  1.670
  1.690
  1.700
Adjusted equity ratio
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335
  0.335

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,049
  3,158
  3,292
  3,450
  3,633
  3,839
  4,070
  4,325
  4,605
  4,910
  6,466
  6,824
  7,211
  7,627
  8,072
  8,549
  9,059
  9,602
  10,180
  10,796
  11,450
  12,144
  12,881
  13,663
  14,490
  15,367
  16,294
  17,276
  18,313
  19,410
Depreciation, amort., depletion, $m
  2,143
  2,155
  2,168
  2,182
  2,198
  2,216
  2,235
  2,255
  2,277
  2,301
  650
  676
  705
  735
  767
  801
  837
  875
  915
  957
  1,002
  1,049
  1,098
  1,150
  1,205
  1,263
  1,324
  1,388
  1,456
  1,526
Funds from operations, $m
  5,192
  5,312
  5,460
  5,633
  5,831
  6,055
  6,304
  6,580
  6,882
  7,211
  7,115
  7,501
  7,916
  8,362
  8,839
  9,350
  9,895
  10,476
  11,095
  11,753
  12,452
  13,193
  13,980
  14,813
  15,696
  16,630
  17,619
  18,664
  19,769
  20,936
Change in working capital, $m
  102
  118
  133
  148
  163
  177
  192
  208
  223
  239
  255
  272
  289
  307
  325
  345
  364
  385
  407
  429
  453
  477
  503
  530
  558
  587
  618
  650
  684
  719
Cash from operations, $m
  5,090
  5,195
  5,327
  5,485
  5,668
  5,877
  6,112
  6,372
  6,659
  6,972
  6,860
  7,229
  7,627
  8,055
  8,514
  9,006
  9,531
  10,091
  10,688
  11,324
  11,999
  12,716
  13,477
  14,283
  15,138
  16,043
  17,000
  18,014
  19,085
  20,217
Maintenance CAPEX, $m
  -457
  -467
  -478
  -491
  -506
  -522
  -540
  -558
  -579
  -601
  -624
  -650
  -676
  -705
  -735
  -767
  -801
  -837
  -875
  -915
  -957
  -1,002
  -1,049
  -1,098
  -1,150
  -1,205
  -1,263
  -1,324
  -1,388
  -1,456
New CAPEX, $m
  -305
  -347
  -392
  -436
  -480
  -524
  -568
  -613
  -659
  -706
  -754
  -803
  -854
  -907
  -961
  -1,018
  -1,077
  -1,138
  -1,202
  -1,268
  -1,338
  -1,410
  -1,486
  -1,566
  -1,649
  -1,735
  -1,826
  -1,922
  -2,021
  -2,126
Cash from investing activities, $m
  -762
  -814
  -870
  -927
  -986
  -1,046
  -1,108
  -1,171
  -1,238
  -1,307
  -1,378
  -1,453
  -1,530
  -1,612
  -1,696
  -1,785
  -1,878
  -1,975
  -2,077
  -2,183
  -2,295
  -2,412
  -2,535
  -2,664
  -2,799
  -2,940
  -3,089
  -3,246
  -3,409
  -3,582
Free cash flow, $m
  4,328
  4,381
  4,456
  4,557
  4,682
  4,831
  5,004
  5,200
  5,421
  5,665
  5,482
  5,776
  6,097
  6,443
  6,818
  7,221
  7,653
  8,116
  8,612
  9,140
  9,704
  10,304
  10,942
  11,619
  12,339
  13,102
  13,911
  14,768
  15,675
  16,636
Issuance/(repayment) of debt, $m
  592
  668
  754
  839
  924
  1,008
  1,094
  1,180
  1,268
  1,358
  1,450
  1,545
  1,643
  1,745
  1,850
  1,959
  2,072
  2,190
  2,313
  2,441
  2,574
  2,714
  2,860
  3,013
  3,172
  3,339
  3,514
  3,697
  3,889
  4,090
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  592
  668
  754
  839
  924
  1,008
  1,094
  1,180
  1,268
  1,358
  1,450
  1,545
  1,643
  1,745
  1,850
  1,959
  2,072
  2,190
  2,313
  2,441
  2,574
  2,714
  2,860
  3,013
  3,172
  3,339
  3,514
  3,697
  3,889
  4,090
Total cash flow (excl. dividends), $m
  4,920
  5,049
  5,211
  5,397
  5,606
  5,840
  6,098
  6,381
  6,689
  7,023
  6,932
  7,322
  7,740
  8,188
  8,667
  9,179
  9,725
  10,306
  10,924
  11,581
  12,278
  13,018
  13,801
  14,632
  15,511
  16,441
  17,425
  18,465
  19,564
  20,726
Retained Cash Flow (-), $m
  -311
  -337
  -380
  -423
  -465
  -508
  -551
  -594
  -639
  -684
  -731
  -778
  -828
  -879
  -932
  -987
  -1,044
  -1,103
  -1,165
  -1,230
  -1,297
  -1,367
  -1,441
  -1,518
  -1,598
  -1,682
  -1,770
  -1,863
  -1,959
  -2,061
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  4,608
  4,712
  4,831
  4,974
  5,141
  5,332
  5,547
  5,786
  6,050
  6,339
  6,202
  6,543
  6,912
  7,309
  7,736
  8,193
  8,681
  9,203
  9,759
  10,351
  10,981
  11,650
  12,361
  13,114
  13,913
  14,759
  15,655
  16,603
  17,605
  18,665
Discount rate, %
  5.80
  6.09
  6.39
  6.71
  7.05
  7.40
  7.77
  8.16
  8.57
  9.00
  9.45
  9.92
  10.42
  10.94
  11.48
  12.06
  12.66
  13.29
  13.96
  14.66
  15.39
  16.16
  16.97
  17.81
  18.71
  19.64
  20.62
  21.65
  22.74
  23.87
PV of cash for distribution, $m
  4,356
  4,187
  4,011
  3,835
  3,657
  3,474
  3,285
  3,089
  2,887
  2,678
  2,297
  2,103
  1,906
  1,709
  1,515
  1,325
  1,144
  973
  815
  671
  543
  432
  336
  256
  191
  139
  99
  69
  46
  30
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Diageo PLC is an alcoholic beverage company. The Company operates in various categories, including spirits and beer. Its geographic segments include North America; Europe, Russia and Turkey; Africa; Latin America and Caribbean, and Asia Pacific. Its principal products includes Scotch whisky, Gin, Vodka, Rum, Beer, Irish Cream Liqueur, Wine, Raki, Tequila, Canadian Whisky, American Whiskey, Progressive Adult Beverages, Cachaca, Brandy and Ready to Drink. The Company's brands includes Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray and Guinness. It manages its operations from various locations, including the United Kingdom; Ireland; Italy; Turkey; the United States; Canada; Brazil; Mexico; Australia; Singapore; India; Nigeria; South Africa; East Africa, and Africa Regional Markets. It also produces a range of ready to drink products mainly in the United Kingdom, Italy, South Africa, Australia, the United States and Canada.

FINANCIAL RATIOS  of  Diageo ADR (DEO)

Valuation Ratios
P/E Ratio 110.5
Price to Sales 24.4
Price to Book 28.5
Price to Tangible Book
Price to Cash Flow 93.9
Price to Free Cash Flow 112.5
Growth Rates
Sales Growth Rate 14.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 2.4%
Cap. Spend. - 3 Yr. Gr. Rate -4.2%
Financial Strength
Quick Ratio 1
Current Ratio 0
LT Debt to Equity 65.4%
Total Debt to Equity 89.4%
Interest Coverage 8
Management Effectiveness
Return On Assets 10.6%
Ret/ On Assets - 3 Yr. Avg. 10.7%
Return On Total Capital 13.8%
Ret/ On T. Cap. - 3 Yr. Avg. 13.3%
Return On Equity 28.3%
Return On Equity - 3 Yr. Avg. 29.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 61.2%
Gross Margin - 3 Yr. Avg. 59.4%
EBITDA Margin 36.6%
EBITDA Margin - 3 Yr. Avg. 36.6%
Operating Margin 29.7%
Oper. Margin - 3 Yr. Avg. 29.1%
Pre-Tax Margin 29.5%
Pre-Tax Margin - 3 Yr. Avg. 28%
Net Profit Margin 22.1%
Net Profit Margin - 3 Yr. Avg. 21.8%
Effective Tax Rate 20.6%
Eff/ Tax Rate - 3 Yr. Avg. 17.9%
Payout Ratio 56.9%

DEO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DEO stock intrinsic value calculation we used $16217.3333333 million for the last fiscal year's total revenue generated by Diageo ADR. The default revenue input number comes from 0001 income statement of Diageo ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DEO stock valuation model: a) initial revenue growth rate of 2.2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.8%, whose default value for DEO is calculated based on our internal credit rating of Diageo ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Diageo ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DEO stock the variable cost ratio is equal to 32%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $6249 million in the base year in the intrinsic value calculation for DEO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Diageo ADR.

Corporate tax rate of 27% is the nominal tax rate for Diageo ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DEO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DEO are equal to 84.5%.

Life of production assets of 33.5 years is the average useful life of capital assets used in Diageo ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DEO is equal to 28.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $13264 million for Diageo ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 103.101 million for Diageo ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Diageo ADR at the current share price and the inputted number of shares is $14.6 billion.

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COMPANY NEWS

▶ [$$] Diageo to Sell 19 Brands Amid Focus on Premium Spirits   [Nov-12-18 08:04PM  The Wall Street Journal]
▶ [$$] Liquor Deal Will Give Diageo a Slight Hangover   [10:25AM  The Wall Street Journal]
▶ [$$] Diageo to Sell 19 Brands Amid Focus on Premium Spirits   [06:38AM  The Wall Street Journal]
▶ Diageo Sells Portfolio of Brands   [01:20AM  ACCESSWIRE]
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▶ How Financially Strong Is Diageo plc (LON:DGE)?   [Oct-29-18 02:43AM  Simply Wall St.]
▶ [$$] Next chief hopes for shares bargain   [Oct-26-18 01:07AM  Financial Times]
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