A Quick Look at Diageo's EPS Forecasts

LONDON -- It's always worth keeping an eye on the earnings forecasts for your favorite companies, especially if you use forward P/E ratios to gauge when to buy and sell your shares.

You never know; if City brokers have been revising their projections of late, your investments may not be as cheap -- or expensive -- as you think!

Today I'm looking at the earnings-per-share forecasts for Diageo (LSE: DGE  ) (NYSE: DEO  ) , the FTSE 100 drinks group. All my figures are courtesy of S&P Capital IQ.

The consensus for 2012 is for EPS of 92 pence, which puts the 1,863 pence shares on a lofty forward P/E of 20. However, the estimates suggest earnings may rise to 103 pence per share for 2013 and rise further to 115 pence for 2014.

Earnings may then advance to 128 pence per share for 2015, and they show no sign of slowing when EPS could climb to 144 pence during 2016, at least according to City analysts.

The data from S&P Capital IQ also indicates Diageo's revenue may climb from around 10.8 billion pounds to 14.5 billion pounds by 2017.

All told, the forecasts look bright, with earnings and revenue expected to rise steadily. But then again, that P/E of 20 suggests the market is already expecting great things from Diageo.

Whether these projections make Diageo a buy, a hold, or a sell is of course up to you. To put the company's multiple into perspective, the FTSE 100 at 5,873 trades on a P/E of 11.

If you already have Diageo in your portfolio, there are plenty of other great stocks out there to consider, too. Some of them are listed in our special in-depth Motley Fool report: "Eight Top Dividend Plays Held By Britain's Super Investor." The report is completely free and shows where buy-and-hold maestro Neil Woodford believes the best FTSE shares are to be found today. You can download the report by clicking here.


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Related Tickers

10/21/2014 4:02 PM
DEO $113.48 Up +0.09 +0.08%
Diageo (ADR) CAPS Rating: ****
DGE $1749.68 Up +0.68 +0.04%
Diageo CAPS Rating: No stars

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