Diageo plc (ADR) (DEO): Is The Company an Exciting Emerging Market Play?

The company has also ramped up M&A activity in other regions in recent years, including the purchase of Ethiopia’s Meta Abo brewery in 2012, as well as increasing its stake in Vietnam’s Halico spirits firm to just under half. And its purchase of Turkey’s Mey İçki the previous year is now fully integrated, significantly boosting sales in Africa, Turkey, and Eastern Europe. I fully expect acquisitions to keep on rolling well into the future.

So is Diageo a buy?
City analysts expect earnings per share to rise 9% to 103 pence in the year ending June 2013, before marching 12% higher the during the following 12 months to 115 pence. The drinks giant was recently dealing on a P/E rating of 19 and 17 for 2013 and 2014, correspondingly, representing a discount to a prospective earnings multiple of 17.6 for the whole beverages sector.

And I believe that an appealing dividend policy, combined with its consistent delivery of earnings expansion, seals the investment case for Diageo plc (ADR) (NYSE:DEO).

The firm hiked last year’s full-year payment almost 8% to 43.5 pence in 2012, and brokers expect this to increase to 47 pence and 52 pence in 2013 and 2014. These dividends carry yields of 2.4% and 2.6%, below the average FTSE 100 yield of 3.3%, although the firm’s record of lifting dividends should lift it close to the benchmark in coming years.

The article Is Diageo an Exciting Emerging Market Play? originally appeared on Fool.com and is written by Royston Wild.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool recommends Diageo (ADR).

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