Diageo plc (DEO, NYSE) is the world’s largest premium alcoholic beverage company. Its major brands include Guinness stout, Smirnoff vodka, Johnnie Walker scotch whisky, Captain Morgan rum and Bailey’s Irish Cream. In its latest fiscal year, which ended June 30, 2010, Diageo’s sales rose 5.0%, to 9.8 billion pounds from 9.3 billion pounds in the prior year (1 British pound = $1.53 U.S.). Overall sales volumes rose 2%. Volumes fell 2% in North America. However, that was more than offset by a 1% gain in Europe, a 2% rise in the Asia Pacific region and an 8% jump in other markets. Earnings per American Depositary Receipt (ADR) rose 3.0%, to 2.65 pounds from 2.57 pounds. Each ADR represents four Diageo common shares. If you exclude costs related to a restructuring, which included laying off workers and closing distilleries and warehouses, earnings would have risen 6.3%. The company pays dividends twice a year. For fiscal 2010, these payments totaled 1.52 pounds per ADR, up 5.5% from 2009. That gives Diageo’s stock a 3.6% yield. Diageo is a buy.
Patrick McKeough, Wall Street Stock Forecaster
