DiageoFRA:GUI -0.03%64 Forward Rate of Return (Yacktman) % is 9.13% as of Jun. 2025, which is 8% above its 10-year median of 8.46. GuruFocus rates FRA:GUI with a GF Score™ of 64/100 and a GF Value™ of €28.06 (Significantly Undervalued). The stock has 5 warning signs investors should review. Among 163 Beverages - Alcoholic companies, Diageo ranks worse than 50.92% on this metric.
Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. Diageo's forward rate of return for was 9.13%.
The historical rank and industry rank for Diageo's Forward Rate of Return (Yacktman) % or its related term are showing as below:
FRA:GUI'
s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: 2.77 Med: 8.46 Max: 12.07
Current: 10.27
During the past 13 years, Diageo's highest Forward Rate of Return was 12.07. The lowest was 2.77. And the median was 8.46.
FRA:GUI's Forward Rate of Return (Yacktman) % is ranked worse than 50.92% of 163
companies
in the Beverages - Alcoholic industry
Industry Median: 10.37
vs FRA:GUI: 10.27
Unlike the Earnings Yield %, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
Diageo (FRA:GUI) Forward Rate of Return (Yacktman) % Explanation
Unlike the Earnings Yield, the Forward Rate of Return uses the normalized Free Cash Flow of the past five years, and considers growth. The forward rate of return can be thought of as the return that investors buying the stock today can expect from it in the future.
For the growth part of the Forward Rate of Return calculation, GuruFocus uses the 5-year average growth rate of EBITDA per share as the growth rate, and the growth rate is always capped at 20%. For the Free Cash Flow we use per share data averaged over five years. The reason we use five years is to make it comparable to the growth rate.
Be Aware
In the Forward Rate of Return calculation, the growth rate is added directly to today's free cash flow yield. Therefore the calculation is reliable only if the company can grow at the same rate in the future as it did in the past. Investors should pay close attention to this when researching growth stocks. A more accurate measurement for return is Return on Capital.
Diageo Forward Rate of Return (Yacktman) % Related Terms
Diageo Forward Rate of Return (Yacktman) % Historical Data
* Premium members only.
The historical data trend for Diageo's Forward Rate of Return (Yacktman) % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
FRA:GUI vs BF.B: Forward Rate of Return (Yacktman) % Comparison
For the Beverages - Wineries & Distilleries subindustry, Diageo's Forward Rate of Return (Yacktman) %, along with its competitors' market caps and Forward Rate of Return (Yacktman) % data, can be viewed below:
* 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. Note that "N/A" values will not show up in the chart.
Diageo Forward Rate of Return (Yacktman) % vs Beverages - Alcoholic Industry
For the Beverages - Alcoholic industry and Consumer Defensive sector, Diageo's Forward Rate of Return (Yacktman) % distribution charts can be found below:
* The bar in red indicates where Diageo's Forward Rate of Return (Yacktman) % falls into.
Diageo Forward Rate of Return (Yacktman) % Calculation
Forward Rate of Return is a concept that Don Yacktman uses in his investment approach. Yacktman explained the forward rate of return concept in detail in his interview with GuruFocus. Yacktman defines forward rate of return as the normalized free cash flow yield plus real growth plus inflation. He said in the interview (March 2012, when the S&P 500 was at about 1400):
If the business is stable, this calculation is fairly straightforward. For instance, on the S&P 500 we would normalize earnings. We would then calculate what percentage of those earnings are not reinvested in the underlying businesses and are therefore free. Historically, for the S&P 500, this has been just under 50% of earnings. Currently, we expect the S&P to earn about 70 on a normalized basis, a number which is far below reported earnings due to our adjusting for record high profit margins. $70 X ½ / 1400 gives you a normalized free cash flow yield of approximately 2.5%.
The historical real growth rate of the S&P 500 (companies) is about 1.5%. Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the S&P 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation).
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
What does a Forward Rate of Return (Yacktman) % of 9.13% mean?
Diageo (FRA:GUI) has a Forward Rate of Return (Yacktman) % of 9.13% as of Jun. 2025. Yacktman's forward rate of return equals the sum of normalized free-cash-flow yield plus earnings growth. View historical data on Diageo and its competitors. This is near median its historical median of 8.46. Over the past decade, Diageo's Forward Rate of Return (Yacktman) % has ranged from 2.77 to 12.07. According to the industry distribution chart, Diageo ranks #83 out of 163 companies in the Beverages - Alcoholic industry, placing it in the top 50.9%.
Is Diageo's Forward Rate of Return (Yacktman) % too high?
Diageo's current Forward Rate of Return (Yacktman) % of 9.13% is near median its 10-year median of 8.46. Over the past 10 years, this metric has ranged from a low of 2.77 to a high of 12.07. The Beverages - Alcoholic industry median Forward Rate of Return (Yacktman) % is 10.37. Diageo's value of 9.13% is 12% below this industry median. Based on the distribution chart, Diageo ranks #83 out of 163 companies in the Beverages - Alcoholic industry, which is below the industry midpoint. Overall, Diageo has a GF Score™ of 64/100 and is considered Significantly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Diageo's Forward Rate of Return (Yacktman) % compare to BF.B?
According to the Beverages - Alcoholic industry distribution chart, Diageo ranks #83 out of 163 companies for Forward Rate of Return (Yacktman) %. This places Diageo in the lower half of its industry. The industry median Forward Rate of Return (Yacktman) % is 10.37. Diageo's value of 9.13% is 12% below this benchmark. Historically, Diageo's own Forward Rate of Return (Yacktman) % has ranged from 2.77 to 12.07 over the past decade. While the company's 10-year median is 8.46 vs. the industry median of 10.37, Diageo has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Forward Rate of Return (Yacktman) % for a Beverages - Alcoholic company?
The median Forward Rate of Return (Yacktman) % among Beverages - Alcoholic companies is 10.37, based on 163 companies in the industry. Companies in the top quartile (top 25%) have a Forward Rate of Return (Yacktman) % significantly above this median, while those in the bottom quartile fall well below. However, Forward Rate of Return (Yacktman) % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Diageo's current Forward Rate of Return (Yacktman) % of 9.13% is 12% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Forward Rate of Return (Yacktman) % mean?
A high Forward Rate of Return (Yacktman) % can signal that a stock is expensive relative to its fundamentals. Yacktman's forward rate of return equals the sum of normalized free-cash-flow yield plus earnings growth. View historical data on Diageo and its competitors. For the Beverages - Alcoholic industry, the median Forward Rate of Return (Yacktman) % is 10.37 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Diageo's current Forward Rate of Return (Yacktman) % is 9.13%, which is near median its own 10-year median of 8.46. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Diageo stock overvalued right now?
Based on GuruFocus' analysis, Diageo (FRA:GUI) is currently considered Significantly Undervalued. The stock's GF Value™ is €28.06, compared to a current price of €17.56 — trading 37.4% below its estimated fair value. The current Forward Rate of Return (Yacktman) % is 9.13%, which is near median its 10-year median of 8.46 and 12% below the Beverages - Alcoholic industry median of 10.37. Diageo's overall GF Score™ is 64/100 with 5 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Forward Rate of Return (Yacktman) % calculated?
Forward Rate of Return (Yacktman) % is calculated from a company's financial statements. For Diageo (FRA:GUI), the current Forward Rate of Return (Yacktman) % is 9.13% as of Jun. 2025. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Diageo (FRA:GUI) Overvalued in 2026?
Based on GuruFocus' analysis, Diageo stock appears to be undervalued.
The current stock price of €17.56 is trading 37.4% below its estimated GF Value™ of €28.06.
GuruFocus considers Diageo to be Significantly Undervalued.
Key valuation signals for FRA:GUI:
Forward Rate of Return (Yacktman) %: 9.13% (near median its 10-year median of 8.46)
GF Value™: €28.06 vs. price of €17.56 (37.4% below fair value)
Industry Position: 12% below the Beverages - Alcoholic median (#83 of 163)
No single metric tells the full story. See the FRA:GUI stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Formed in 1997 through the merger of Grand Metropolitan and Guinness, Diageo is the largest distiller globally by sales. Diageo acquired some of the Seagram assets in 2001, which gave it brands such as Captain Morgan rum and Crown Royal Canadian whisky. Since then, mergers and acquisitions have mostly been bolt-on in nature, plugging gaps in the company's product and geographic portfolio.
64GF Score
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Forward Rate of Return (Yacktman) % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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