Buffett Brain · Research note
Score updated 29 Oct 2026 · analysis from 13 Jul 2026
DEO· Consumer Staples
Diageo
Diageo's strong brand portfolio and high margins contrast with its middling returns and high leverage, presenting a mixed investment case.
Buffett fit
Partial fit
Owner
60
Durability
59
Management
48
Price
54
Score updated 29 Oct 2026 · analysis from 13 Jul 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Staples stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Diageo outright, I would focus on leveraging its strong brands to maintain while managing the high debt load, with a net debt/EBITDA of 4.20.
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Diageo's business model has shown resilience, with profitability in all five recent years, but the negative EPS CAGR of -1.8% raises flags about future growth.
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Management has been disciplined, with a share count CAGR of -1.25% and a yield of 2.58%, indicating a commitment to returning value to shareholders.
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The current yield of 5.58% is below the 8-10% threshold I typically seek, indicating that the price may not reflect .
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 159.7% is above the sector top-quintile cutoff of 50.2%.
- 227.3% ranks in the top-quintile for the sector.
- 3Diverse product portfolio with strong brands like Johnnie Walker and Guinness.
- 4Profitable in all five years, indicating some business durability.
Concerns
5- 1 of 9.4% is below the sector top-quintile cutoff of 15.2%.
- 2Net debt/EBITDA of 4.20 indicates high , raising financial risk.
- 3EPS CAGR of -1.8% suggests potential growth challenges.
- 4Current ratio of 1.60 is adequate but indicates limited liquidity buffer.
Price history
$91.96-53.9%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Diageo produces a wide range of alcoholic beverages, generating $20.25B in revenue with a of 59.7%. The company benefits from strong brand loyalty, particularly with Johnnie Walker and Guinness. Its diverse product lineup allows it to capture various market segments, leading to solid cash flow generation. The unit economics are favorable, but the high debt levels raise concerns about sustainability.
What other investors would say
The same company, judged by three other documented playbooks.
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