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Diageo PLC  (NYSE:DEO) Intrinsic Value: Projected FCF: $54.52 (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 $54.52. The stock price of Diageo PLC is $135.43. Therefore, Diageo PLC's Price to Intrinsic Value: Projected FCF Ratio of today is 2.5.

NYSE:DEO' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 1.08   Max: 2.5
Current: 2.48

1.08
2.5

During the past 13 years, the highest Price to Intrinsic Value: Projected FCF Ratio of Diageo PLC was 2.50. The lowest was 1.08. And the median was 1.72.

NYSE:DEO's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
99.99% of the 109 Companies
in the Global industry.

( Industry Median: 1.95 vs. NYSE:DEO: 2.48 )

Historical Data

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

* Premium members only.

Diageo PLC Annual Data

Jun08 Jun09 Jun10 Jun11 Jun12 Jun13 Jun14 Jun15 Jun16 Jun17
Intrinsic Value: Projected FCF Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 56.92 54.50 54.40 48.35 52.92

Diageo PLC Semi-Annual Data

Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17
Intrinsic Value: Projected FCF Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 54.40 0.00 48.35 0.00 52.92

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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 (Diluted Average)

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 (Diluted Average)


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

Diageo PLC Annual Data

total_freecashflow

Add all the adjusted EPS together and divide 6 will get Diageo PLC's FCF(6 year avg) = $.

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

Intrinsic Value=(Growth Multiple*Free Cash Flow(6 year avg)+Total Equity(Jun17)*0.8)/Shares Outstanding (Diluted Average)
=(9.52035159596*2417.34234234+13936.4864865*0.8)/630.750
=54.16

* 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
=135.43/54.1627240842
=2.50

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


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