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Is Diageo a Buy?

TheMotleyFool

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Diageo (NYSE: DEO) owns some of the most valuable drinking brands in the industry, including Johnnie Walker, Guinness, Smirnoff, Captain Morgan, and Crown Royal. These brands have delivered market-beating gains for investors with Diageo stock nearly tripling the return of the S&P 500 over the last 20 years. However, in the last decade, the stock has performed roughly in line with the broad market.

The stock currently trades for a forward P/E of 23 times analysts' earnings estimates, representing a premium to the average consumer staples stock. Let's look at why Diageo deserves to trade at that premium, and what kind of return investors can expect from here.

IMAGE SOURCE: DIAGEO.

Source Fool.com

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