Diageo stock (NYSE: DEO) has fallen 6% in a month, while it’s down 18% year-to-date. The company recently paused some of the whiskey sales in a few states in India to push the price hikes.  This move may result in a hit on the region’s volume growth in the near term. Late last month, the company reported its full-fiscal 2022 results (fiscal ends in June) with revenue growth of 20% y-o-y, led by both volume and price gains across geographies. However, a high inflationary environment and rising oil prices will likely weigh on consumer demand, impacting retail stocks. For instance, Diageo’s peer, Anheuser-Busch Inbev stock (NYSE; BUD), has also seen a 7% fall in a month.
Now that Diageo stock has seen a fall of 6% in a month, will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a higher chance of an increase in DEO stock over the next month. Of 206 instances in the last ten years that DEO stock saw a twenty-one-day fall of 6% or more, 127 resulted in DEO stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 127 out of 206, or about a 62% chance of a rise in DEO stock over the next month. See our analysis of Diageo Stock Chance of Rise for more details.
Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using the last ten years’ data
- After moving -5% or more over five days, the stock rose on 73% of the occasions in the next five days.
- After moving -5% or more over ten days, the stock rose on 65% of the occasions in the next ten days.
- After moving -6% or more over a twenty-one-day period, the stock rose on 62% of the occasions in the next twenty-one days.
This pattern suggests a higher chance of a rise in DEO stock over the next five days, ten days, and the next month.
Diageo (DEO) Return (Recent) Comparison With Peers
- Five-Day Return: STZ highest at 0.1%; SAM lowest at -5.6%
- Ten-Day Return: STZ highest at 3.4%; BUD lowest at -9.5%
- Twenty-One Day Return: STZ highest at 1.4%; SAM lowest at -7.8%
Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for PepsiCo vs. Williams-Sonoma.
|S&P 500 Return||-2%||-15%||81%|
|Trefis Multi-Strategy Portfolio||-2%||-15%||239%|
 Month-to-date and year-to-date as of 8/29/2022
 Cumulative total returns since the end of 2016
- Diageo Pauses Some Whiskey Sales in India to Push Price Hikes, Bloomberg, Chris Kay, Aug 26, 2022 [↩]