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Analyst Estimates: Here's What Brokers Think Of Diageo plc (LON:DGE) After Its Yearly Report

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The yearly results for Diageo plc (LON:DGE) were released last week, making it a good time to revisit its performance. It looks like the results were a bit of a negative overall. While revenues of UK£13b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 2.3% to hit UK£1.13 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Diageo

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Diageo's 19 analysts is for revenues of UK£13.4b in 2022, which would reflect an okay 5.6% increase on its sales over the past 12 months. Per-share earnings are expected to expand 13% to UK£1.29. Before this earnings report, the analysts had been forecasting revenues of UK£13.2b and earnings per share (EPS) of UK£1.30 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of UK£36.82, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Diageo, with the most bullish analyst valuing it at UK£43.00 and the most bearish at UK£26.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Diageo's past performance and to peers in the same industry. The analysts are definitely expecting Diageo's growth to accelerate, with the forecast 5.6% annualised growth to the end of 2022 ranking favourably alongside historical growth of 1.8% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 5.6% annually. Diageo is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Diageo going out to 2024, and you can see them free on our platform here..

You still need to take note of risks, for example - Diageo has 1 warning sign we think you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.