FOREIGN VALUE: Diageo
Market cap: $34.9 billion
P/E ratio: 12
Earnings growth: 9%
Dividend yield: 4.2%
The global spirits industry may be heading for a round of consolidation, and leading spirits company Diageo can attest to the fact that mergers can drive growth. It has entered new markets and increased margins by selling more brands through its existing sales force after acquiring Seagram, Bushmills, and Ketel One. Diageo is in the market again, possibly pushing to own all of Moet Hennessy, in which it currently has a 34% stake.
The company's 7% sales drop for the first three months of 2008 is among the mildest declines posted by similar beverage companies; and the company reaffirmed that it expects 4% to 6% growth in operating profit for its current fiscal year and double-digit earnings per share growth.
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Last updated June 11 2009: 10:27 AM ET
Criteria include low price/earnings and price/book ratios relative to competitors, rising profit margins, and accelerating earnings growth. All data related to stock price as of June 1, 2009. P/E ratios based on the previous 12 months' reported earnings. Earnings growth based on Wall Street estimates for the next three to five years.
