Diageo (LSE: DGE) shares are beaten but not broken and a recovery has already begun, with the shares up 18% since recent lows.
But they can continue to struggle amid weakness in the US spirits market and softer demand in China. While the past two months have shown early signs of a recovery, they’re still down 21.2% since this time last year.
In recent Q3 results, North America organic net sales declined 9.4%, reflecting ongoing weakness in the region. Data suggests that changing drinking habits and cautious spending may be disproportionally impacting premium brands.
So is Diageo feeling the brunt of short-term economic weakness, or could there be a deeper story here?
The answer will dictate whether it’s a good value stock to consider at this price. Let’s look deeper.
A promising turnaround story
Supply chain shocks and economic pressure are real factors that are putting heavy pressure on premium spirit sales. Despite a portfolio of strong and enduring brand names, Diageo’s latest Q3 results highlight the challenge clearly.
New CEO Sir Dave Lewis is cutting costs, simplifying the portfolio, and rebuilding trust with investors after a recent dividend cut and downgraded outlook.
Link: https://uk.finance.yahoo.com/news/why-m-bullish-rolls-royce-064500359.html