Diageo Share Price Forecast November 2021 – Time to Buy DGE?
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Shares of premium drinks company Diageo (LSE: DGE) are in the red today, closing on £3759.5 as of November 26th (17:56 GMT). Diageo’s performance over the last 12 months has also been impressive which has led to a 33.3% return on investment for investors. The company has recently revealed bold plans to increase its market share from 4% last year to 6% by 2030.
Diageo – Technical Analysis
Diageo’s financial statement reveals the following. The market cap of the company is currently at £8.757 trillion with total assets worth £3.195 trillion. Revenue for 2021 is at £1273.30 billion with a profit margin of 20.89% compared to £1175.20 billion in 2020.
Oscillators such as Relative Strength Index (14)(51.8), Stochastic %K (14, 3, 3)(47.5), Commodity Channel Index (20)(−28.0), Average Directional Index (14)(32.1) and Awesome Oscillator(115.3) are neutral. Moving averages such as Exponential Moving Average (10)(3834.0), Simple Moving Average (10)(3862.1), Exponential Moving Average (20)(3802.2) and Simple Moving Average (20)(3814.8) are indicating a sell action.
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Recent Developments
Diageo shares stood just above £13 almost ten years ago, with shareholders enjoying an annual investment growth rate in excess of 13%. Recent trading updates from the company has been very encouraging. In the update released on November 16th, the company expects organic net sales growth of at least 16% in the first half of fiscal 2022. It also expects its organic sales to be between 5 to 7% for fiscal 2023-2025. All of these suggests that Diageo expects to grow at a decent rate for the years ahead.
On Early November, Diageo announced plans to build the group’s first distillery in China for producing a China-origin, single malt whisky. The Diageo Eryuan Malt Whisky Distillery will be built in Eryuan County in Yunnan Province. The site for the upcoming 66,000 square meter distillery is 2,100 meters above sea level. The site is characterised by its temperate climate, rich natural biodiversity, and access to natural spring water. The company will use Renewable and clean technologies to ensure it is a zero-waste site, is carbon neutral, and recycles all the water it uses.
Diageo has also announced plans to build a $500 million tequila distillery in the southwest Mexican state of Jalisco. The company has also announced that tequila sales have risen 79% in the past financial year, which has been attributed to the Covid-19 lockdown, which has led to a surge in online buying and the making of summer cocktails at home. The new Mexican plant will create around 1000 jobs and would contribute towards the company’s 10-year sustainability plan by incorporating environment-friendly technologies.
Should You Buy DGE Shares?
Diageo has been expanding in Latin America, Africa, and Asia with the help of its vast cash reserve, worth £3.7 billion. But falling alcohol sales and global regulations can prove to be hurdles in the upcoming years. The company has also commenced the next tranche of its return of capital program of up to 4.5 billion pounds to shareholders by entering into an agreement with Goldman Sachs International which will enable it to buy back shares with a value of up to GBP 550,000. The main aim of this agreement was to reduce the share capital of Diageo and all shares repurchased under this agreement will be cancelled, Considering this, now is not the time to buy Diageo shares, but you can keep them on your watchlist for the foreseeable future.
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