NEW YORK (TheStreet) -- The global beverage giant Diageo (DEO) has teamed with the international rap star Diddy to purchase DeLeon, a luxury brand of tequila produced in the Mexican town of Purisima del Rincon. Diddy (a.k.a. Sean Combs) and Diageo are hoping to replicate the success of their Ciroc vodka venture, which resulted in a 40-fold increase in sales as Diddy fronted for Diageo's label.
For long term investors, Diageo offers a cocktail of earnings, sales, and dividend growth.
Based in London, Diageo is the world's biggest distiller. It sells such well-known brands as Guiness, Ketel One, Johnie Walker and Captain Morgan in more than 180 countries.
Both sales and earnings growth are improving for Diageo. Over the past five years, sales growth was 7.2%. On a quarterly basis, sales growth is now at 16.9%.
Earnings-per-share growth is showing the same bullish pattern. At present, earnings-per-share growth is 34.8% on a quarterly standard. For the year, it is 27.5%. That is a significant improvement from the earnings-per-share growth rate of 11.50% registered for the last five years.Overall, Diageo reports 28% growth for "profit attributable to parent company's equity shareholders" from 2012 to 2013. The best performing brand in terms of sales growth has been Buchanan's Scotch whisky, with a 26% net movement. Next is Crown Royal, with a 17% jump. Bushmills and Tanqueray both posted 12% increases in sales. The spirits category had the highest sales growth at 9%. Much of that sales growth has come from a focus on the expanding consumer class in emerging market nations. A report from McKinsey predicts that one billion people will join the global consumer class by 2025.
Diageo has toasted the newly affluent in Brazil, China, India and other developing nations with an increase in sales of more than one-third. At present, emerging markets account for 42% of sales. That is up from 30% in 2004. According to Ivan Menezes, its Chief Executive Officer, Diageo expects more than half of its revenues to emanate from countries other than Great Britain and the United States in the years ahead. The shareholders of Diageo should look forward to rising dividends for the future, too, based on the history of the company.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV