Diageo plc

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• Diageo plc
• Group 4
• Adrienne Cichelli
• Ryan Patton
• Stefan Stoyanov

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Company Overview

• Worlds leading premium drinks producer
• Headquartered in London. Stock listed on London
  Stock Exchange and NYSE
  
• Market Cap - 53.4 Billion
• Forward P/E-16.1
• Dividend yield - 3.7

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Smirnoff No 1 premium vodka in the world
Johnnie Walker No 1 Scotch whiskey in the
world Guinness No 1 Stout in the world Capta
in Morgan No 2 Rum in the world
No 1 spirit in US Baileys No 1 liqueur in t
he world JB No 2 Scotch whiskey in the w
orld Cuervo No 1 tequila in the world Ta
nqueray No 1 imported gin in US
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Investment Thesis

• Safe company limited downside due to
• Strong Brand Names
• Global sales
• Pricing Power
• High Shareholder Value provided by
• Extremely attractive ROE/ROA/ROIC
• Good Organic growth paid to investors through
  dividends buyback
  
• Attractive valuation
• DCF
• Relative
• Buy/BUD

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Safe Company/Limited downside

• Strong Brand Names
• Global sales
• Pricing Power
• Economies of scale

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Shareholder Value

• Return on Equity 43.65
• Return on Assets 14.11
• Return on Invested Capital 13.70

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Shareholder Value

• Dividend Yield 3.8
• Share Repurchases
• 1.4 Billion (2.8 Billion)

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Shareholder Value

• 1 of 4 Mega Caps that have
• 3 Dividend Yield
• 30 ROE
• 30 EBIT Margin

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Valuation

• DCF - 15 Undervalued
• Actual Price (12/4/06) 77.42
• DCF Intrinsic Share price 89.17
• Relative Valuation - 20 undervalued

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Discounted Cash Flow
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P/E Relative Valuation
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Recommendation

• Buy
• Sell BUD
• Strong brand names
• Global sales
• Pricing power/Margins
• Larger dividend

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