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Things haven’t been pretty for Diageo (LSE:DGE) shares over the past year, to put it mildly. A series of issues has driven its share price sharply lower, from weak sales in key regions, concerns over strategy under new CEO Debra Crew, and signs that anti-obesity jabs could stymie future growth.
The FTSE 100 company has slumped 23% in value since this point in 2025. Yet despite this, I haven’t thought about selling my own shares in the alcoholic drinks giant, not for a second.
Powered by its heavyweight brands like Captain Morgan and Guinness, I’m confident Diageo’s share price could recover from this point. But when exactly could any rebound kick in?
Bright price estimates
If City estimates are accurate, the company’s shares will bounce back sooner rather than later. Some 20 analysts currently have ratings on the Footsie stock, giving a good range of thoughts.
Their consensus opinion is that it will rise more than 20% over the next 12 months.
As with most shares, however, brokers aren’t unanimous in their conclusions. One especially bearish forecaster reckons Diageo will endure another double-digit price fall over the period.
But the majority are largely positive. The most optimistic analyst thinks shares will rise more than 40% over the period.
Judging by Diageo’s latest trading numbers I think these brokers may be onto something. Net sales rose 2.9% in the three months to March, with organic net revenues up 5.9%, thanks to higher volumes and better pricing.
Sales rose in all regions bar Asia Pacific too, leading to hopes the recent cyclical downturn could be largely behind it.
Dividend growth expected
Signs of improving demand also means dividends are tipped to rise over the near term. That said, analysts tip a slight decline to around 102.1 US cents per share for the financial year just passed (to June).
A full-year payout of 102.5 cents is tipped for this year, and an increased one of 102.8 cents for fiscal 2027. These are supported by predictions that Diageo will return to earnings growth over the period (bottom-line rises of 5% and 7% are forecast for this year and next respectively).
Clearly predicted dividend growth isn’t anything to get excited about. But projections do lead to market-leading dividend yields of 3.9% for financial 2026, and 4% for next year.
Is Diageo a buy?
While I’m a long-term believer in Diageo, I wouldn’t bet the house on its share price rebounding sharply over the near term. Uncertainty continues to cloud the economic outlook, and thumping global trade tariffs could further worsen any fresh downturn in consumer spending
But I’m quietly optimistic that the stock will spring back into life. My bullish long-term view certainly remains in tact, driven by the considerable pricing power of its brands and rising alcoholic drink demand in emerging markets.
I’m also encouraged by the ongoing success Diageo’s having in fast-growing segments like premium and non-alcoholic drinks. The latter category in particular could help it navigate the growing popularity of GLP-1 weight-loss jabs if this becomes a lasting trend.
Today, the company trades on a forward price-to-earnings (P/E) ratio of 16.2 times. That’s well below its 10-year average of around 23.3 times.
It’s not without risks, sure. But at current prices, I think this FTSE share deserves serious consideration.
