Diageo stock: fair value
DEOThe fair value of Diageo under our model is $68.97, the price is 45% above.
The fair value is an estimate from our model, not a price target.
Daily figure as of 13 Nov 2026
Valuation signal
Modestly overvaluedIn our model the price counts as cheap below $49.26 and expensive above $114.95 (uncertainty high, one part of the fair value is more than twice the other).
The two parts of the fair value come to $95.66 (cash-flow model) and $42.27 (industry comparison), and the gap between them shows how uncertain the estimate is. The price is above both.
Calculated with a cost of equity of 8.8%. At 9.8% the fair value would be $61.09, at 7.8% it would be $80.78.
Where the number comes from
Half from the cash-flow model, half from earnings times the industry P/E (13.6).
Ten-year cash-flow model from smoothed free cash flow and its past growth until it reaches 3.8%. Discounted at 8.8% (floor: government bond yield 3.8% plus 5 percentage points, since beta 0.8 times the risk premium would give less); no analyst estimates were available.
Calculate with your own assumptionsThe calculation step by step
With these figures the cash flow model arrives at $95.66 per share: free cash flow for the next ten years, each year discounted to today at 8.8%, plus the terminal value for the years after. The table explains the calculation; it is not a recommendation.
Calculation as a table
| Year | Free cash flow | Source | Discount factor | Present value (discounted at 8.8%) |
|---|---|---|---|---|
| 2027 | $2.91B | extrapolated at −1.0% | 0.9189 | $2.68B |
| 2028 | $2.93B | extrapolated at 0.4% | 0.8443 | $2.47B |
| 2029 | $2.97B | extrapolated at 1.5% | 0.7758 | $2.3B |
| 2030 | $3.03B | extrapolated at 2.2% | 0.7129 | $2.16B |
| 2031 | $3.12B | extrapolated at 2.7% | 0.6550 | $2.04B |
| 2032 | $3.21B | extrapolated at 3.0% | 0.6019 | $1.93B |
| 2033 | $3.31B | extrapolated at 3.3% | 0.5530 | $1.83B |
| 2034 | $3.43B | extrapolated at 3.4% | 0.5082 | $1.74B |
| 2035 | $3.55B | extrapolated at 3.6% | 0.4669 | $1.66B |
| 2036 | $3.68B | extrapolated at 3.6% | 0.4291 | $1.58B |
| Step | Value |
|---|---|
| Sum of present values (ten years) | $20.4B |
| Terminal value: cash flow 2036 × (1 + 3.8%) / (8.8% − 3.8%) | $76.4B |
| Present value of terminal value (× 0.4291) | $32.78B |
| Equity value (sum plus present value of terminal value) | $53.18B |
| Shares (diluted) | 555.93M |
| Value per share (equity value divided by shares) | $95.66 |
| Earnings per share, last twelve months | $3.11 |
| × 13.6 (industry P/E) | $42.27 |
| Fair value (average of both parts) | $68.97 |
The model uses free cash flow after interest, which belongs to shareholders, discounted at the cost of equity. Net debt is therefore not deducted again.
Data status and sources
- Score
- Daily value of 13 Nov 2026, recalculated nightly
- Price
- Closing price of 12 Nov 2026
- Latest annual report
- Fiscal year 2026, period end 30 Jun 2026
- Source
- Financial statements, ratios and prices from Financial Modeling Prep (FMP), based on the company's reports. MEQIRI calculates the score and fair value from them.
Mandatory disclosures for this rating
- ; time horizon around 12 months
- Rated Neutral, published since 7 Nov 2026 (in the score history since 15 Aug 2025)
- Valuation signal Fairly valued since 7 Nov 2026
- End-of-day prices, metrics cached for up to 24 hours
- Score and fair value are estimates from a disclosed model. They are not facts and not a price target.
- Produced by SSM Ventures UG (haftungsbeschränkt), responsible person Sven Brostmeyer, Managing Director, automatically according to the disclosed model.
- Not investment advice. Losses up to and including a total loss are possible. Personal circumstances are not considered.