Thanks, a good analysis Nick. I held some, but for all the reasons you point
out (and maybe a lucky guess!), felt they were overvalued and sold at the end
of June at 2675p. They are currently above their price in 2018, the turnover is
lower and profit considerably lower.
I am sure Pulpex will do very well, but Diageo is a £12bn turnover company
across multiple sectors and I suspect it may be a long time before they see any
great relative benefit from their investment in what may prove to be a game
changing technology.
Richard S
Sent from my iPad
On 10 Aug 2020, at 17:25, Nicholas Gallop <nsgallop@xxxxxxxxx> wrote:Peter - counter to your commentary, I suggest Diageo is overvalued, and I
thought it would lead to a better discussion this evening to have advance
notice:
a. PE Ratio
Company 42.7x Industry 23.3x Market 15.9x
This is the kind of PE ratio you might expect for a high growth company, and
Diageo isn’t.
b. which leads to a higher than desirable PEG ratio of 2.4
c. PB Ratio
Company 8.9x Industry 2.9x Market 1.4x
This PB ratio is out of line with the rest of the industry, and I can’t see
anything that might justify the premium.
d. You say: 'They are totally committed to the paper bottle/packaging and the
shares are now for long term investors'.
Clearly for your company, the Diageo contract is very significant,
By contrast, for Diageo, a step in the direction of improved sustainability
is welcome, but will the use of a cardboard bottle on some of it’s products
will probably have little effect on the share price.
Your view is a bit tail-wagging-the-dog-ish
e. You say: 'I don’t think we are making a loss yet'.
In fact, a few minutes ago, we were 3.1% down (this excludes any dividend,
but I don’t think there have been any in the relevant period.
Generally, including dividends, Diageo shares have underperformed vs.the
industry
<PastedGraphic-7.tiff>
e. Dividend cover:
The payout ratio is currently 116% i.e. dividend > earnings, though forecasts
suggest this ratio will improve, the dividend is not currently sustainable.
Nick Gallop
+44 (0)7867 808 872
nick.gallop on Skype
On 10 Aug 2020, at 13:20, Peter Dixon <pcsdixon@xxxxxxxxxxx> wrote:
Hi All, attached are my raconteur notes.
Sorry I am not able to put a chart up as not very computer savvy.
Hope to see you all tonight.
Peter D.
<WVIC Raconteur notes Meeting date.docx>
