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GuruFocus has detected 3 Warning Signs with Diageo PLC $DEO.
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Diageo PLC (NYSE:DEO)
Intrinsic Value: Projected FCF
$46.83 (As of Today)

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today, Diageo PLC's projected FCF intrinsic value is $46.83. The stock price of Diageo PLC is $121.71. Therefore, Diageo PLC's Price to Intrinsic Value: Projected FCF Ratio of today is 2.6.

DEO' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 1.07   Max: 2.61
Current: 2.6

1.07
2.61

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Diageo PLC was 2.61. The lowest was 1.07. And the median was 1.71.

DEO's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
99.99% of the 94 Companies
in the Global Beverages - Wineries & Distilleries industry.

( Industry Median: 2.13 vs. DEO: 2.60 )

Definition

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company.

The details of how we calculate the intrinsic value of stocks are described in detail here.

This method smooths out the free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of total equity.

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + 0.8*Total Equity(most recent))/Shares Outstanding

In the case of negative total equity, the following formula is used (see the Total Equity section for the reason):

Value = ((Growth Multiple)*Free Cash Flow(6 year avg) + Total Equity(most recent)/0.8)/Shares Outstanding


Here Diageo PLC's FCF(6 year avg) is calculate as

Diageo PLC Quarterly Data

201206201212201306201312201406201412201506201512201606201612
total_freecashflow 0000000000
200712200803200806200812200906200912201006201012201106201112
total_freecashflow 0000000000
200612200703200706200709
total_freecashflow 0000

Add all the Free Cash Flow together and divide 6 will get Diageo PLC's FCF(6 year avg) = $0.00.

Diageo PLC's Intrinsic Value: Projected FCF for today is calculated as

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Dec16)*0.8)/Shares Outstanding
=(9.52035159596*0+11827.7153558*0.8)/630.750
=15.00

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The growth multiple is capped between 8.35 and 17.74.

Total equity weighting is more art than science and it should always be revisited in more detail when researching a company. Weightings from 0% to 100% to more than 100% are possible. 80% was chosen as a happy medium after taking the above ideas into consideration. Learn more here.

Diageo PLC's Price to Intrinsic Value: Projected FCF Ratio for today is calculated as

Price to Intrinsic Value: Projected FCF=Share Price/Intrinsic Value: Projected FCF
=121.71/15.0014622032
=8.11

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Intrinsic Value: DCF (Earnings Based), Intrinsic Value: DCF (FCF Based), Free Cash Flow


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Diageo PLC Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
Projected FCF 44.8354.4453.3858.5461.2959.7657.1154.3654.0248.03

Diageo PLC Quarterly Data

Jun12Dec12Jun13Dec13Jun14Dec14Jun15Dec15Jun16Dec16
Projected FCF 59.760.0057.110.0054.360.0054.020.0048.030.00
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