Diageo (NYSE:DEO) and Philip Morris International (NYSE:PM) are both large-cap consumer staples companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, profitability, risk, dividends, earnings and institutional ownership.
Volatility & Risk
Diageo has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, Philip Morris International has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500.
Profitability
This table compares Diageo and Philip Morris International's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Diageo | N/A | N/A | N/A |
Philip Morris International | 10.07% | -78.02% | 20.17% |
Dividends
Diageo pays an annual dividend of $3.05 per share and has a dividend yield of 1.9%. Philip Morris International pays an annual dividend of $4.80 per share and has a dividend yield of 5.6%. Diageo pays out 55.5% of its earnings in the form of a dividend. Philip Morris International pays out 92.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Philip Morris International has increased its dividend for 12 consecutive years. Philip Morris International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Diageo and Philip Morris International's gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Diageo | $14.82 billion | 6.36 | $1.78 billion | $5.50 | 29.27 |
Philip Morris International | $77.92 billion | 1.71 | $7.19 billion | $5.19 | 16.49 |
Philip Morris International has higher revenue and earnings than Diageo. Philip Morris International is trading at a lower price-to-earnings ratio than Diageo, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
10.1% of Diageo shares are owned by institutional investors. Comparatively, 74.2% of Philip Morris International shares are owned by institutional investors. 0.2% of Philip Morris International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Analyst Recommendations
This is a summary of current ratings and target prices for Diageo and Philip Morris International, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Diageo | 3 | 6 | 11 | 0 | 2.40 |
Philip Morris International | 0 | 4 | 6 | 0 | 2.60 |
Diageo currently has a consensus target price of $143.50, suggesting a potential downside of 10.79%. Philip Morris International has a consensus target price of $97.7273, suggesting a potential upside of 14.38%. Given Philip Morris International's stronger consensus rating and higher possible upside, analysts plainly believe Philip Morris International is more favorable than Diageo.
Summary
Philip Morris International beats Diageo on 11 of the 17 factors compared between the two stocks.