Diageo (LSE:DGE): Is the Drinks Giant Undervalued After Recent Share Price Movement?

Diageo's shares have recently experienced some fluctuations, attracting investor attention following mixed returns over the past months. The longer-term outlook remains a key focus for many.

This year, Diageo’s share price has declined by nearly 30%. Although there has been a slight recovery in recent weeks, it has not fully offset the sharper drops seen earlier in 2024. The one-year total shareholder return stands at -18.8%, highlighting subdued momentum as investors balance growth concerns against evolving risks.

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Valuation Debate

With the current share price at £17.98 and the most widely accepted fair value estimate at £23.48, a notable valuation gap exists. This discrepancy fuels the debate over whether Diageo is undervalued or if the market has already priced in its future prospects, leaving limited potential for gains.

Strategic Focus

Diageo is sharpening its strategy by emphasizing premiumization and expanding its product categories, particularly in tequila and ready-to-drink beverages. This approach aims to tap into rising consumer wealth and brand preferences across both emerging and developed markets.

“The 1-year total shareholder return sits at -18.8%, which underscores that momentum remains muted as investors continue to weigh a mix of growth concerns and evolving risks.”

Author’s summary: Diageo faces challenges with a significant share price drop, but its strategic focus on premium products and category growth may offer potential upside despite current market skepticism.

Simply Wall Street — 2025-11-06