Diageo (DEO) Downgraded by Zacks Investment Research to Sell

Zacks Investment Research lowered shares of Diageo (NYSE:DEO) from a hold rating to a sell rating in a report released on Wednesday, Zacks.com reports.

According to Zacks, “Diageo’s top-line performance is being negatively impacted by adverse currency rates, which is likely to persist in fiscal 2019. Further, input cost inflation and higher transportation costs are likely to weigh on margins. During first-half fiscal 2019, the company witnessed inflationary pressures from commodity costs. Further, inflationary cost pressures from commodity and transportation will slightly mar gross margin in second-half fiscal 2019. The company also expects muted operating margin growth in the second half, due to the phasing of productivity costs and marketing expenses. However, Diageo outperformed the industry in the past year driven by its expansion and innovation strategy. This aided sales and earnings growth in first-half fiscal 2019. Moreover, the company’s focus on achieving growth via acquisitions is yielding results. Its focus on expanding presence in emerging markets and premium brands is also encouraging.”

Several other equities research analysts have also recently weighed in on the company. Investec cut Diageo from a hold rating to a sell rating in a research note on Monday, March 25th. Sanford C. Bernstein cut Diageo from a market perform rating to an underperform rating in a research note on Friday, January 4th. Barclays started coverage on Diageo in a research note on Monday, April 1st. They set an overweight rating on the stock. Liberum Capital raised Diageo from a sell rating to a hold rating in a research note on Thursday, January 31st. Finally, Macquarie restated a buy rating on shares of Diageo in a research report on Sunday, December 16th. Three analysts have rated the stock with a sell rating, two have assigned a hold rating and six have issued a buy rating to the company. The company currently has a consensus rating of Hold and a consensus target price of $164.75.

NYSE DEO traded up $0.34 during trading hours on Wednesday, hitting $163.27. 75,002 shares of the company were exchanged, compared to its average volume of 314,218. The company has a debt-to-equity ratio of 0.94, a current ratio of 1.48 and a quick ratio of 0.73. Diageo has a 52 week low of $131.43 and a 52 week high of $165.53. The stock has a market capitalization of $99.29 billion, a P/E ratio of 25.71, a PEG ratio of 2.84 and a beta of 0.53.

The firm also recently announced a semiannual dividend, which will be paid on Tuesday, April 16th. Shareholders of record on Friday, March 1st will be given a dividend of $1.3688 per share. The ex-dividend date is Thursday, February 28th. This represents a dividend yield of 1.81%. Diageo’s dividend payout ratio (DPR) is presently 42.83%.

Several large investors have recently made changes to their positions in DEO. Bank of New York Mellon Corp boosted its position in shares of Diageo by 661.5% during the third quarter. Bank of New York Mellon Corp now owns 255,087 shares of the company’s stock valued at $36,139,000 after buying an additional 221,590 shares during the period. Public Employees Retirement Association of Colorado boosted its position in shares of Diageo by 27.7% during the fourth quarter. Public Employees Retirement Association of Colorado now owns 547,691 shares of the company’s stock valued at $77,663,000 after buying an additional 118,880 shares during the period. Rehmann Capital Advisory Group boosted its position in shares of Diageo by 14,075.6% during the third quarter. Rehmann Capital Advisory Group now owns 107,876 shares of the company’s stock valued at $761,000 after buying an additional 107,115 shares during the period. Deutsche Bank AG boosted its position in shares of Diageo by 12.9% during the third quarter. Deutsche Bank AG now owns 907,480 shares of the company’s stock valued at $128,560,000 after buying an additional 103,997 shares during the period. Finally, Clearbridge Investments LLC boosted its position in shares of Diageo by 31.5% during the third quarter. Clearbridge Investments LLC now owns 427,577 shares of the company’s stock valued at $60,575,000 after buying an additional 102,479 shares during the period. Institutional investors and hedge funds own 10.62% of the company’s stock.

About Diageo

Diageo plc, together with its subsidiaries, produces, markets, and sells alcoholic beverages worldwide. The company offers a collection of brands across spirits, beer, cider, and wine categories. Its brands include Johnnie Walker, Crown Royal, J&B, Buchanan's and Windsor whiskies, Smirnoff, Cîroc and Ketel One vodkas, Captain Morgan, Baileys, Don Julio, Bundaberg, McDowell's No.

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