Critical Review: Diageo (NYSE:DEO) & Heineken (OTCMKTS:HEINY)

Heineken (OTCMKTS:HEINY) and Diageo (NYSE:DEO) are both large-cap consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares Heineken and Diageo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Heineken	N/A	N/A	N/A
Diageo	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Heineken and Diageo, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Heineken	0	7	1	2	2.50
Diageo	1	6	6	0	2.38

Diageo has a consensus target price of $106.25, indicating a potential upside of 27.82%. Given Diageo’s higher probable upside, analysts clearly believe Diageo is more favorable than Heineken.

Dividends

Heineken pays an annual dividend of $1.01 per share and has a dividend yield of 2.3%. Diageo pays an annual dividend of $1.52 per share and has a dividend yield of 1.8%.

Valuation & Earnings

This table compares Heineken and Diageo”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Heineken	$38.75 billion	1.27	$2.13 billion	N/A	N/A
Diageo	$19.80 billion	2.34	$2.35 billion	N/A	N/A

Diageo has lower revenue, but higher earnings than Heineken.

Insider & Institutional Ownership

9.0% of Diageo shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Heineken has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Diageo has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500.

Summary

Diageo beats Heineken on 6 of the 10 factors compared between the two stocks.

About Heineken

Heineken N.V. brews and sells beer and cider in the Americas, Europe, Africa, the Middle East, Eastern Europe, and the Asia Pacific. The company provides soft drinks and water. It offers its beers under the Heineken, Heineken Light, Orchard Thieves, Orchard Thieves Light, Birra Moretti, Coors, Murphy's and Beamish Stouts, Desperados, Tiger, Sol, and Foster's brand, as well as under regional and local brands. The company offers its products to retailers, wholesalers, cafes, bars, pubs, hotels, and restaurants. Heineken N.V. was incorporated in 1864 and is based in Amsterdam, the Netherlands. The company operates as a subsidiary of Heineken Holding N.V.

About Diageo

Diageo plc, together with its subsidiaries, engages in the production, marketing, and sale of alcoholic beverages. The company offers scotch, gin, vodka, rum, raki, liqueur, wine, tequila, Chinese white spirits, cachaça, and brandy, as well as beer, including cider and flavored malt beverages. It also provides Chinese, Canadian, Irish, American, and Indian-Made Foreign Liquor whiskies, as well as flavored malt beverages, ready to drink, and non-alcoholic products. The company provides its products under the Johnnie Walker, Crown Royal, J&B, Buchanan’s, Smirnoff, Cîroc, Ketel One, Captain Morgan, Baileys, Don Julio, Casamigos, Tanqueray, Guinness, Shui Jing Fang, Yenì, McDowell’s, Don Papa, Aviation American, Seagram, Seagram’s 7 Crown, Zacapa, Black Dog, Black & White, Signature, Royal Challenge, Godawan, Antiquity, Gordon’s, Old Parr, Windsor, Bundaberg, Ypióca, Bulleit, and Bell’s brand names. It operates in the United States, the United Kingdom, Türkiye, Australia, Korea, India, Greater China, Brazil, Mexico, South Africa, Nigeria, and internationally. The company was incorporated in 1886 and is headquartered in London, the United Kingdom.