As I type, the price has fallen a little over 10% since the beginning of the year. And that’s after taking into account the relief rally we’ve seen since a ceasefire between the US and Iran was announced.

With a bog-standard FTSE 100 tracker up almost 7%, I don’t blame existing owners of the battered brewer from feeling rather hard done by.

Why Diageo shares remain unpopular

I think there could be a few reasons for this ongoing negative momentum.

First, there’s the fact that new CEO Dave Lewis is still settling in. Four months is simply not long enough to turn a juggernaut like Diageo around. Yes, a stock can sometimes ‘bounce’ on the belief that a new dawn is coming but this is usually temporary if nothing has changed to the business plan. And so far, nothing really has. February’s interim numbers were even worse than expected.

One thing that Lewis has done, however, is cut the dividend. To be fair, this was always on the cards. When the chips are down, those distributions are often the first to go. But it’s definitely not something investors would have cheered.

On top of this, the more long-term concerns remain. The popularity of weight-loss drugs shows no signs of slowing down. The growing obsession with fitness among younger generations – while no bad thing in itself – also means that many are spurning alcohol in favour of gym memberships.

The prospect of a rise in inflation as a result of the conflict in the Middle East was never going to improve sentiment either, especially as the company already has a hefty amount of debt on its books.

Better times ahead?

Taking the above into account, it’s reasonable to think Diageo shares will continue falling from here. But I’m also not convinced it’s nailed on.

By far the most compelling reason to at least consider investing today is the valuation. A price-to-earnings (P/E) ratio of 12 for the current financial year (ending in June) is already seriously low, especially for a company with a bumper portfolio of brands and global reach.

When expectations are on the floor, it’s remarkable how even the slightest bit of good news can bring out the buyers. Perhaps this might come mid-May when the firm is down to release its next statement on trading. Regardless, the forthcoming World Cup surely won’t be bad for business, especially if the weather behaves.

Get your wallet out, Dave!

Notwithstanding this, I would like to see a bit of director buying. To me, there’s nothing more encouraging than seeing those who know the company better than anyone else backing it with their own cash. So far into the new leader’s tenure, there’s been very little.

There is, of course, no guarantee that any company will recapture its former glory. This is why spreading money around the market is so important. But it’s telling that Tesco‘s share price also continued falling when Lewis took over in 2014 before stabilising and then rising.

I still reckon we could see the same thing happen with Diageo shares.

The post Why is everyone still selling Diageo shares? appeared first on The Motley Fool UK.

What has happened since? The share price fell yet further, down 13% from the beginning of the year. That could mean April 2026 is simply an even more undervalued entry point, or it could mean the shares are nothing more than a falling knife – not something you want to catch hold of. Here’s what I think.

Consequences

It’s hard to discuss any stock this spring without mentioning the conflict in Iran. There’s good reason, too. There aren’t many companies across the world that won’t be affected by the blocked shipping lanes, rising cost of energy and insurance, and the consequences of inflation up and down the supply chain.

Inflation is the last thing Diageo wants after its recent struggles. For context, the latest sales figures suggest that folks are buying cheaper spirits, the problem especially pronounced with the white spirits (or baijiu) it sells in China.

This is at odds with the ‘premiumisation’ strategy the firm has been gunning for. Essentially, Diageo has been targeting the top end of the market while consumers have been shifting to the bottom end.

Fresh inflation worries might exacerbate these problems. And that’s a real risk if the conflict persists for much longer. This is one reason why the share price has been falling this year.

The case

How are things looking now then? Well, bargain hunters will notice that the forward price-to-earnings ratio has now dropped to around 11. That’s well below the FTSE 100 average and less than half the P/E ratio of 25 that Diageo had been trading at only a couple of years ago.

Such a cheap valuation suggests threats on the horizon or a company in decline. Which is the case here?

It’s true that concerns around lower alcohol consumption have been one of the causes of the firm’s malaise. The biggest risk is probably that the recent shift away from booze among Gen Z and those taking weight-loss drugs accelerates. These type of macroeconomic factors can worsen the plight of even the best-run businesses.

On the other hand, revenue and earnings haven’t been hit hard yet. That’s why the P/E ratio is looking so attractive – Diageo is still making a lot of money. And the latest forecasts suggest sales will grow in all regions over the next two years. I think the stock is worth considering.

The post How are Diageo shares looking in April 2026? appeared first on The Motley Fool UK.

What’s interesting is that over the same time frame, another UK consumer stock has soared. Perhaps this name is akin to a reverse-Diageo play?

Diageo’s main problem

From US tariffs to weight-loss drugs, Diageo is facing a lot of challenges at the moment. The greatest challenge, however, is probably just the fact that a lot of people are drinking less.

This is especially true among younger generations. These days, these generations are more focused on health, wellness, and feeling good.

I see it all the time. For example, in London, I often see big groups of youngsters out running or training together at the gym on a Saturday or Sunday morning.

This is their social activity. And there’s not a hangover in sight.

This company is benefitting

This brings me to my reverse-Diageo play. It’s British supplements powerhouse Applied Nutrition (LSE: APN).

It sells protein powders, hydration solutions, pre-workout products, and tons of other health and wellness goodies. Whereas Diageo is selling everything you need for a big night out, Applied Nutrition has everything you want if you’re looking to get fit and healthy.

So it’s very much the opposite of an alcoholic beverages company. It appears to be a consumer stock for the modern age.

Its share price is certainly moving in the opposite direction. Over the last year, it has jumped about 95%.

An investment opportunity?

Are Applied Nutrition shares worth a look today? I think so.

Underlying growth here is really strong. For the six-month period to 31 January, for example, revenue was up 57% year on year to £74.5m. Meanwhile, the valuation looks very reasonable. At present, the shares trade on a price-to-earnings (P/E) of just 19.

One other thing to like is that the share price has pulled back a little recently due to Middle East uncertainty. This has created an attractive (in my view) entry point.

Of course, there are plenty of risks. Middle East instability is one – this could increase shipping costs and/or hit demand in this area of the world.

Longer term, I think a bigger threat is a major consumer slowdown as a result of job losses. If AI continues to take jobs, more younger people may find themselves out of work and strapped for cash and this could impact demand for discretionary products.

Overall though, I like the risk/reward proposition today.

How about Diageo?

What about Diageo shares though? Are they worth considering/holding on to?

Well, I’m a long-term holder here and I’m not writing them off just yet. I’m hoping new CEO Dave Lewis can turn the company – and the stock – around.

There are plenty of moves he can make. One smart strategy could be to focus more on lower alcohol beverages to appeal to the health-focused generation mentioned above.

Note that the valuation here is super low – currently, the P/E ratio is only 11.5. In light of this valuation, I do think they are worth considering as a recovery play.

The post As Diageo shares sink, this ‘opposite’ stock in the FTSE 250 is soaring  appeared first on The Motley Fool UK.

There’s been little for investors in the FTSE 100 share to celebrate. Until now, at least, with sales stabilising and a new CEO in town hoping to turn things around.

Could Diageo’s share price be about to stage a stunning recovery? Each of the 21 analysts with ratings on the Guinness maker think it’s about to rise from current levels. The least optimistic forecaster thinks prices will reach £14.72 over the coming 12 months, up 6% from today. However, another reckons Diageo will rise a superb 76% in value by this time next year, to £24.50.

So who is right?

Gone flat

In reality, every one of these analysts expecting Diageo to rise could be proved wrong. Few had expected Diageo shares to experience the sustained underperformance of recent years. History could well repeat itself.

In fact, following the outbreak of war in the Middle East, the chances of this happening have increased. Sales have been under extreme pressure from weak consumer spending in recent years. Diageo’s decision to double-down on ‘premium’ drinks has left it especially vulnerable to the inflationary pressures that have seen drinkers drop down to cheaper labels.

An extended war in Iran could prolong its revenues problems, driving inflation and interest rates higher and cooling economic growth. The conflict also brings a range of cost problems, like raising energy-related expenses and the cost of making aluminium cans.

But it’s not just the war that threatens Diageo’s share price. The firm must also get to grips with lower alcohol consumption in its Western markets, a trend worsened by appetite-suppressing meds like Ozempic.

Why Diageo shares could rebound

Then again, the stock was moving sharply higher in 2026 before the war began, as hopes a turnaround under new CEO Dave Lewis gathered pace. If the conflict draws to a rapid close, and the company’s turnaround strategy yields more positives, investor appetite for the drinks giant could return.

Shareholders like me are hoping ‘Drastic Dave’ will wield the stick, selling underperforming labels, cutting costs and pivoting back towards mainstream drinks. And so far he’s living up to expectations, including axing layers of management, and in March he oversaw the $1.8bn sale of Indian cricket team Royal Challengers Bengaluru from its United Spirits subsidiary.

More recently, Diageo has been enjoying stronger sales in Europe, Asia, and Latin America and the Caribbean. The US and China may be tougher nuts to crack, but success in fast-growing areas like non-alcoholic beverages (think Guinness 0.0) and the ready-to-drink (RTD) market are an encouraging sign.

The final word

With the Iran War raging on, I can’t predict with any confidence where Diageo shares will go over the next year. But I do think the FTSE 100 stock will recover strongly over the long term. And with its shares trading on a rock-bottom price-to-earnings (P/E) ratio of 11.9, I feel it’s a top value stock to consider.

The post Will Diageo shares rise to £14.72 or SURGE to £24.50? appeared first on The Motley Fool UK.

Diageo was long seen as one of the most reliable blue-chips. Its recent struggles are a reminder that no stock is completely safe. The ups and downs are the price investors pay for the superior long-term returns from equities.

Long-term blue-chip troubles

Those prepared to stay invested may be rewarded, but patience is essential. Diageo has faced a series of setbacks since that first warning. The cost-of-living crisis has pushed consumers towards cheaper types of firewater, denting demand for its carefully honed portfolio of premium brands. This trend has spread across major markets including China, Europe and the US.

Tariffs have also hurt exports of Mexican tequila and Canadian whisky to the US. The death of long-standing chief executive Ivan Menezes, followed by the short tenure of Debra Crew, didn’t help. Diageo also faces longer-term questions over changing drinking habits among younger consumers and the impact of weight loss drugs. Given all that, the obvious question is why anyone would invest at all.

Well I have. I bought after the original dip, and have averaged down on several occasions. So far to little avail. But consumer stocks like this one tend to be cyclical, they rise and fall with economic conditions. At some point, the sell-off will overshoot and with luck the shares will snap back. That’s my theory.

Diageo still owns a formidable portfolio of global brands, including Smirnoff, Baileys, Guinness, Tanqueray and Johnnie Walker. It also has a new chief executive in Dave Lewis, who turned around Tesco during a difficult period. He’s reset expectations and is pursuing asset sales to reduce debt.

The Iran war is the latest setback. Diageo is down 13.5% over the past month, amid concerns that another inflation surge will further batter consumer demand. Over one year, the shares are down 32%, and 61% over three years.

Beware the headline yield

The valuation now looks more attractive. The forward price-to-earnings ratio is around 12, roughly half historic levels. As the share price has fallen, the dividend yield has risen. The trailing yield stands at 5.7%, which may tempt investors to buy before the shares go ex-dividend on 16 April. Beware: that figure is misleading. Lewis recently cut the dividend in half. Forecasts now suggest more modest yields of 2.9% next year and 3.1% in 2027.

That weakens the income case. The investment argument rests more on Diageo’s recovery potential. It should respond if trading stabilises and management delivers progress. But we may have to wait until the war is over and the economy has started to recover. Which could be some time.

I think Diageo is worth considering, despite its troubles, but only with a long-term view. I’d suggest feeding money in rather than committing capital all at once. Things could still get worse before they get better.

The post Should investors snap up Diageo shares before they go ex-dividend on 16 April? appeared first on The Motley Fool UK.

My question was answered earlier this week. The Middle East conflict has thrown up fresh hazards, including a brand-new danger that few (if anyone) had predicted.

So what’s happened? And should investors be avoiding Diageo shares like the plague?

Metal mayhem

Companies across the globe are experiencing greater cost pressures as the conflict continues. Energy prices are a huge drag on corporate profits, and Diageo’s no different. But the drinks giant faces a new cost threat many others shares aren’t: soaring aluminium prices.

This week, prices of the critical metal hit four-year highs of around $3,500 a tonne. The reason? Iran’s now targeting aluminium-producing facilities with drone attacks, raising existing supply fears. Both Emirates Global Aluminium and Aluminium Bahrain — which operates the world’s biggest single-site smelter — have reported damage in recent days.

The Strait of Hormuz closure is also impacting aluminium supplies. Costs could keep rising the longer the conflict rages on.

Problems mounting

The FTSE firm uses aluminium extensively to package Guinness, its ready-to-drink (RTD) products, and some of its premium drinks. Aluminium can account for 60%-85% of a can’s total cost. And with consumers feeling the pinch, Diageo has little-to-no wiggle room to pass these costs on.

I wouldn’t say this is reason enough to avoid or sell Diageo shares. However, it’s one more problem the firm has to overcome to start growing profits again.

The company has a job in its hands to revive sales as consumers cut back on premium spirits. A backcloth of weak economic growth and rising inflation is making things extremely tough. On top of this, Diageo must successfully navigate changing tastes in its Western markets — more specifically, rising demand for non-alcoholic beverages.

Are Diageo shares a buy?

The question for investors is: do these issues make Diageo a share to avoid? I don’t think so. With a forward price-to-earnings (P/E) ratio of just 12 times, I think these problems are more than baked into the share price. For context, the long-term P/E sits is between 21 and 22.

For me, the issue’s whether the business can bounce back from its current problems. I believe it can, making now a good time to consider buying the company on the dip. I’m considering increasing my own holdings as I write.

My main concern is that broader alcohol demand continues to sink. However, the business has demonstrated time and again its ability to adapt to changing tastes. And the roaring success of new lines like Guinness 0.0 suggest it knows how to address this particular challenge too.

I’m also hopeful that new CEO Dave Lewis will accelerate any turnaround, through measures like refocusing on core labels and selling underperforming ones. To me, Diageo still has enormous long-term earnings potential, and especially in its fast-growing markets.

The company could face further volatility in the coming weeks and months. But all things considered, I think Diageo shares are worth serious attention.

The post Diageo shares just can’t catch a break! Here’s a major new risk appeared first on The Motley Fool UK.

The FTSE 100 stock is down 65% since January 2022! 

Recent weeks have brought no solace, with the share falling 14.5% in the past month. This would have turned a five-grand investment made in early March into roughly £4,275.

The great debate

The great Diageo debate essentially boils down to whether the downturn in the global spirits market is structural or cyclical. In other words, whether it’s permanent (like falling cigarette volumes) or just temporary.

Perhaps unsurprisingly, Diageo’s new CEO Dave Lewis leans towards the cyclical view. Would he have taken the job if he thought the industry was suffering irreversible long-term decline? I suspect not.

There’s some evidence to support this view. Categories like Guinness and ready-to-drink (RTD) cocktails are still growing. Meanwhile, Diageo’s Scotch portfolio returned to volume growth in the last six months of 2025 (H1), led by Johnnie Walker, Buchanan’s, and Black & White.

Similarly, its spirits RTD portfolio grew net sales by 17%, with Smirnoff RTDs increasing around 13% to gain share in four out of five regions, including North America. The firm says RTDs address “consumer demand for both convenience at an accessible price point, and moderation“.

However, total group organic volume still fell by 0.9% in H1. And organic net sales dropped 2.8%, as did organic operating profit before exceptional items.

Last year, global beverage alcohol volume was thought to have declined by 0.7%, according to industry data provider IWSR. For reference, global cigarette industry volume is expected to fall around 2% in 2026.

So the decline is not as steep as with cigarettes, at least not yet.

What about GLP-1s?

Muddying the waters is the rise of GLP-1 weight-loss drugs like Mounjaro, which appear to reduce appetite for alcohol in some users.

In the US, roughly one in eight adults will be taking these medications by 2030, according to JP Morgan. And patents are already starting to expire around the world, meaning GLP-1 costs will plummet in future.

Addressing this topic, the chief executive says he’s reading every piece of research available to better understand the risk. But he cited one large recent survey of GLP-1 users, which said the impact on spirits specifically was “really rather small“.

Is Diageo worth considering?

So, we don’t yet know whether alcohol is in structural decline or how much impact GLP-1s might have. But weak consumer spending is undoubtedly a central problem. And the inflationary Iran war isn’t helping things here near term.

Despite this, I still think the stock’s worth considering at 1,385p. At this price, the forward price-to-earnings ratio is just 11.4, alongside a 3.5% dividend yield.

With consumer goods expert Lewis in charge, I expect Diageo to become a far more focused company. Just last week, it offloaded its Indian Premier League cricket franchise for approximately £1.3bn (a hefty valuation multiple).

Yesterday (31 March), Deutsche Bank changed its rating to Buy. It believes Diageo can “invest in price, marketing, route to market, and innovation, leaving [it] better able to deliver the sort of predictable profitable growth that investors value highly“.

The average broker price target is now 44% higher at 1,995p.

The post £5,000 invested in Diageo shares 1 month ago is now worth… appeared first on The Motley Fool UK.

But the bigger question for investors is whether this is simply a normalisation phase… or the market starting to price in something more permanent.

Why Diageo’s weakness may be being misread

Strip away the noise, and the message from the new CEO about the H1 results is relatively simple: spirits demand is not collapsing — consumers are simply trading down and moderating spend under economic pressure. That points to a cyclical reset, not a structural break.

Penetration of spirits remains broadly stable across its key markets, and consumption frequency has not materially deteriorated. Where weakness is emerging is not in whether people are drinking, but in how much they spend per occasion.

This distinction matters for investors. Cyclical moderation typically reflects temporary pressure on disposable income, whereas structural decline implies a permanent reduction in category demand and earnings power. The current evidence continues to support the former rather than the latter.

Is premiumisation broken?

Premiumisation has been one of the most powerful long-term drivers in the spirits industry, and Diageo has been a clear beneficiary of that trend.

The key point is that premiumisation itself is not broken. Consumers are not abandoning higher-quality spirits, and the company’s premium portfolio continues to perform well across core markets.

What has changed is the source of growth. In a more constrained consumer environment, premium mix expansion is no longer the sole driver of category growth. Instead, demand is spreading more evenly across price points and consumption occasions.

Market cycle response

In response, the company is broadening its portfolio reach. Rather than relying solely on premiumisation, it is strengthening its price-pack architecture, expanding smaller pack formats, and rebuilding participation in value-oriented segments where it is underweight.

Importantly, this is not a strategic reversal, but an adaptation to cycle conditions. Premium brands such as Johnnie Walker, Tanqueray, and Don Julio remain central to the long-term value creation story.

As consumers trade down rather than exit the category, Diageo is repositioning to capture demand across the full spectrum of spending behaviour. This includes greater exposure to smaller packs and the fast-growing ready-to-drink (RTD) category.

These moves are designed to improve participation in the parts of the market where volume growth is currently strongest.

What’s the verdict?

In my view, the market is still overemphasising cyclical weakness and underestimating portfolio resilience. Diageo is adapting to where demand is strongest, not where it used to be.

Beyond the cycle, there is also a more gradual turnaround story taking shape. Management is refocusing the business on execution, innovation discipline, and customer engagement after years of operational drift.

That matters because long-term value creation in spirits is driven as much by brand strength and route-to-market execution as it is by category growth.

If the group can improve innovation effectiveness and rebuild sharper commercial execution, the combination of stabilising demand trends and better internal focus should support a re-rating over time.

With the long-term growth story very much intact, I recently added to my position. I’m also watching a number of other beaten-down stocks closely.

The post Diageo shares are down 28% — but is the market overcorrecting a cyclical slowdown? appeared first on The Motley Fool UK.

For the year ahead, I intend to sell my investments and stay in cash. Instead of dividends, I’m going to earn interest.

The problem with stocks

Investors give three main reasons for preferring stocks to cash. They are as follows:

1. Stocks do better over the long term.
2. Stocks generate passive income.
3. Stocks provide protection from inflation.

Ok. Try telling any of that to Diageo (LSE:DGE) shareholders. 

A £10,000 investment in Diageo shares from 10 years ago is now worth £7,385. If that’s not long term, I don’t know what is.

The point about passive income is also wrong. Some stocks pay dividends to shareholders, but don’t forget where that comes from. It comes out of the company’s cash. And if the shareholders own the business, the cash was theirs in the first place. 

Diageo shares also show there is no protection from inflation. In fact, inflation is a big reason why the stock has done so badly.

Cash is king

Investing in the stock market might have made sense when I was born (in 1988). But things were different back then. Interest rates were nearly 12%, which meant there was only one direction they could go – down. And that was always going to be good for share prices.

Today, though, things are different. Interest rates are at 3.75% and there isn’t much scope for them to go lower.

That means there’s a real risk that share prices might fall. Investors can’t just ignore this, no matter how much they might like to.

Cash, on the other hand, only goes up and if interest rates rise, it’ll go up even faster. So I’m going to transfer my Stocks and Shares ISA to a cash one.

April Fools!

Did I get you? I almost got myself for a moment there…

I’m not selling out of my Stocks and Shares ISA and I don’t think cash is a better long-term bet. But what’s wrong with the arguments I made above?

In the case of Diageo, the stock has faltered for two reasons. One is that it was trading at a price-to-earnings (P/E) ratio of 24 a decade ago.

That didn’t leave much room for things to go wrong. So when the business came up against challenges – even temporary ones – the share price crashed.

The story with stocks collectively, though, has been quite different. The FTSE 100 has outperformed cash by a long way over the last decade.

It’s true that dividends only return cash to investors. But what I said above ignores the fact that really good businesses are really good cash generators. Diageo’s brands give it the ability to make products at one price and sell them at higher ones. And that does generate cash.

Inflation remains a risk. But cash doesn’t get around that issue, even if interest rates do go higher.

2026-27

It’s a fair point that share prices are unpredictable in the short term. That means nobody – including me – should be investing cash they think they might need to draw on before retirement.

Beyond that, though, getting money into my Stocks and Shares ISA is my priority for 2026-27. And Diageo is one name among many that I’m thinking about.

The post Guaranteed gains and limited losses: here’s my Stocks and Shares ISA plan for 2026-27 appeared first on The Motley Fool UK.

Intrinsic value

Billionaire investor Warren Buffett likes to build stakes in companies whose share prices don’t reflect the underlying (he calls it the “intrinsic”) value of their businesses. This involves making an assessment of the expected future operating cash flows and then adjusting these to reflect the fact that £1 in a year’s time is worth less than it is today.

This is a common approach used by analysts and helps them come up with price targets for the stocks they cover.

A banker?

Brokers’ consensus is that Barclays (LSE:BARC) is 42% undervalued at the moment (31 March). However, their wide range of estimates (450p-590p) is proof that valuing companies is more of an art than a science. Having said that, even the most pessimistic believes the bank’s shares are 18% under-priced.

Why? Well, it appears to be on a bit of a roll at the moment. Its 2025 earnings were 13% higher than in 2024. It’s now aiming for a return on tangible equity of at least 14% in 2028. It was 11.3% in 2025. Also, via dividends and share buybacks, the bank hopes to return more than £15bn to shareholders over the next three years.

Threats include an economic slowdown, particularly in the UK and US. Also, falling interest rates could affect its margin.

But with a price-to-book ratio of less than one and the second lowest price-to-earnings (P/E) ratio of the FTSE 100’s five banks, I think Barclays looks pretty cheap at the moment and could be considered by value investors.

Uncertain times

Hikma Pharmaceuticals‘ (LSE:HIK) shares tanked in February after the drugs maker withdrew its medium-term guidance and downgraded its earnings forecast for 2026.

The group’s injectables business is currently struggling. It’s facing increased competition for some of its higher-value products. And tariffs on its imports into the US have been an issue.

However, I’m confident that its business will recover. It’s investing heavily and has 118 products in its pipeline. What’s more, the stock’s P/E ratio’s now at a five-year low. Also, it offers an above-average dividend (no guarantees). Further, analysts reckon the stock’s 48% undervalued.

But this is a turnaround story. Its share price is likely to be a bit of a slow burner. However, I still think it’s worth considering.

Cheers!

Diageo’s (LSE:DGE) also seeking to recapture former glories. It’s battling industry-wide trends of people drinking less and a move towards more expensive labels.

But with a reputation for cutting out the fat and streamlining businesses, I reckon the group’s new boss, Sir Dave Lewis, is just what’s needed. And he has some solid foundations on which to build.

The group owns some of the biggest brands in the business, including Guinness and Smirnoff. It also covers all price points in its key markets. Despite its troubles, it remains the world’s number-one for spirits.

Analysts have a target that’s 43% higher than today’s share price. Remarkably, Diageo’s shares are now changing hands close to a 14-year low. On balance, I think it remains one for patient investors to consider.

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