Diageo stock forecast
Diageo's weighted price is 2,351.32 GBp in October 2027, with the bear case at 25%, the base case at 55% and the bull case at 20%. It hinges on demand improvement.
Where could Diageo's shares be by 2029?
The weighted price is 2,351.32 GBp in October 2027, implying a 37% return including dividends. The bear case has 25% probability; the base case has 55%. The bull case has 20%.
Probability-weighting gives 2,351.32 GBp in October 2027. It rises to 2,506.82 GBp in October 2028 and 2,695.33 GBp in October 2029. Including dividends, those outcomes represent returns of 37% and 49% from today’s 1,739.50 GBp. The third-year return is 62%.
| Case | Probability | October 2027 | October 2028 | October 2029 |
|---|---|---|---|---|
| Bear | 25 % | 1780.35 (+5 %) | 1585.67 (-5 %) | 1540.02 (-5 %) |
| Base | 55 % | 2421.36 (+41 %) | 2585.34 (+53 %) | 2774.97 (+66 %) |
| Bull | 20 % | 2872.43 (+67 %) | 3442.32 (+102 %) | 3920.44 (+133 %) |
| Weighted | 100 % | 2351.32 (+37 %) | 2506.82 (+49 %) | 2695.33 (+62 %) |
What has to go right or wrong for Diageo's forecast?
The base assumes broadly flat FY27 sales, savings-led margin recovery and later demand improvement. That follows guidance for broadly flat organic sales and low-to-mid-single-digit operating-profit growth. The bear falls from $3,398m in 2027 to $3,240m in 2028, then reaches $3,264m in 2029 as North America, China and tequila remain weak. The bull rises from $4,245m to $4,586m, then $4,957m, as Guinness grows, tequila stabilises and savings reach margins without reducing brand investment. Guinness’s recent growth supports that possibility, but FY26 organic sales fell 2.0%, making the base more credible than the bull.
How much cash does Diageo really make?
Free cash flow subtracts investment in factories, equipment and software from operating cash. It improved because capital spending fell, so the larger surplus does not represent an equally large improvement in trading. Diageo’s own measure also adds proceeds from asset sales. A stricter measure deducts lease payments and the economic cost of stock-based pay.
| Jun 2026 | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | |
|---|---|---|---|---|---|
| = Free cash flow | 3,069 | 2,571 | 2,491 | ||
| − Stock pay | 44 | 59 | 43 | 58 | 79 |
| = Real free cash flow | 3,025 | 2,512 | 2,448 | ||
| Free cash flow — the company's own count | 3,211 | 2,748 | 2,609 | 2,235 | 3,779 |
What does an investor pay for Diageo today?
The apparent bargain rests on a sharp difference between trailing and forward P/E. Trailing P/E uses the last year’s profit, while forward P/E uses an estimate of future profit. Diageo’s FY26 reported EPS was 78.1 US cents, while EPS before exceptional items was 165.3 US cents. A $1.5 billion impairment charge, principally involving Türkiye and Don Papa, depressed reported earnings. An impairment is an accounting reduction in an asset’s value, but it can also show that a brand or market has genuinely weakened.
| Today (Oct 14, 2026) | |
|---|---|
| Share price | 1,739.50 |
| P/E, last 12 months (calculated) | 29.6x |
| P/E, next 12 months (calculated) | 12.9x |
| Free cash flow yield (calculated) | 6.0% |
| Real free cash flow yield (calculated) | 5.9% |
| Dividend yield (calculated) | 2.2% |
What this means. The next 12 months price-to-earnings figure uses analysts’ forecasts, so it is an estimate rather than a guaranteed result.