Diageo 1H26 Earnings Ready to Unfold: What Are the Chances of a Beat?

Diageo Plc DEO is scheduled to release interim results for the first half of fiscal 2026 on Feb. 25. The company has been witnessing difficulties in North America and the Asia Pacific regions, which are expected to have negatively impacted the company’s performance in the first half of fiscal 2026. However, Diageo has been experiencing strong momentum across Europe, Latin America and the Caribbean (LAC), and Africa, as reflected in its first-quarter fiscal 2026 update provided last month.

Key Factors to Note Ahead of DEO’s 1H26 Earnings

Diageo delivered a mixed start to fiscal 2026, with first-quarter organic net sales broadly flat despite positive volume growth. The divergence between volume and price/mix reflected pronounced regional and category shifts, particularly weakness in Chinese white spirits (CWS) and softer U.S. spirits demand.

DEO has been facing troubles in its key markets, including North America and the Asia Pacific, particularly Greater China. The headwinds in North America mainly relate to declines in U.S. Spirits due to soft consumption trends, tough tequila comparisons and increased promotional intensity. 

The Asia Pacific has been the most pressured region, with Greater China witnessing sharp declines due to reduced baijiu category consumption occasions linked to policy impacts, significantly dragging regional performance. Additionally, beer route-to-market adjustments in Australia and China created near-term disruption. However, the company has been witnessing positive trends in India, which is likely to have partly offset the weakness in the Asia Pacific region.

On its fiscal 2025 earnings call, management cautioned that the fiscal 2026 performance will be weighted toward the second half of the year, indicating weak organic net sales and operating profit trends in the first half of fiscal 2026.

On its first-quarter fiscal 2026 update, the company reiterated that the decline in organic net sales is expected to be more pronounced in the first half, reflecting continued pressure from CWS and a softer U.S. consumer environment. Management also expected organic operating profit to decline in the first half before strengthening in the second, supported by improving market mix, phasing of marketing investments, and a greater contribution from Accelerate program savings later in the fiscal year.

However, DEO has been experiencing solid business momentum, strong consumer demand and market share gains, which have been boosting its performance. DEO is anticipated to have retained the strength in its business on constant premiumization efforts and favorable industry trends, particularly in the spirits category.

Despite the ongoing challenges, strength in Europe, LAC and Africa is expected to have aided the company’s performance in the first half of fiscal 2026. Trends in Europe have been bright, driven by continued strong momentum in Guinness and resilient execution despite a subdued spirits backdrop. Pricing in Türkiye and strength in Guinness are expected to support a favorable mix.

In LAC, the company is benefiting from positive trends in Brazil amid a stabilizing consumer environment. Performance in Mexico is expected to have been broadly stable, while positive price/mix trends across much of the region are expected to have aided the results. In Africa, DEO continues its strong trajectory with growth across key markets, though market mix pressured pricing.

Diageo’s Price Performance & Valuation

DEO shares have exhibited an uptrend, rising as much as 9.1% in the past three months, outperforming the S&P 500 index’s growth of 3.2%. However, the Zacks Rank #4 (Sell) stock has underperformed the broader industry’s growth of 23.3% and the Consumer Staples sector’s return of 13.5% in the same period.

DEO’s 3-Month Stock Price Performance

From the valuation standpoint, DEO trades at a forward 12-month P/E multiple of 14.88X, underperforming the industry average of 16.89X and the S&P 500’s average of 22.51X. Diageo’s valuation appears quite cheap compared with the industry at current levels.

Looking for Lucrative Picks? Check These

Here are some companies you may want to consider this earnings season.

Fomento Economico Mexicano FMX, alias FEMSA, is likely to register top and bottom-line growth when it reports fourth-quarter 2025 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $12.4 billion, indicating 24.6% growth from the prior-year quarter. FMX currently has a Zacks Rank #3 (Hold) and an Earnings ESP of +3.92%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for FEMSA’s quarterly earnings has moved down by a penny in the past 30 days to $1.53 per share. The consensus estimate suggests a 232.6% earnings upsurge from the year-ago quarter’s reported number. FMX has delivered a negative earnings surprise of 28.1%, on average, in the trailing four quarters.

Monster Beverage Corporation MNST is expected to register top and bottom-line growth when it reports fourth-quarter 2025 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.05 billion, suggesting 13% growth from the prior-year quarter. The company currently has a Zacks Rank of 3 and an Earnings ESP of +8.31%.

The Zacks Consensus Estimate for Monster Beverage’s quarterly earnings has moved down by a penny in the past seven days to 49 cents per share. The consensus estimate suggests 29% earnings growth from the year-ago quarter’s reported number. MNST has delivered an earnings surprise of 5.5%, on average, in the trailing four quarters.

Celsius CELH currently has a Zacks Rank #3 and an Earnings ESP of +6.46%. CELH is anticipated to register top and bottom-line growth when it reports fourth-quarter 2025 results. The Zacks Consensus Estimate for Celsius’ quarterly revenues is pegged at $638.2 million, indicating growth of 92.1% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Celsius’ bottom line has moved up by a penny in the past 30 days to 19 cents per share. The consensus estimate for CELH suggests growth of 35.7% from the year-ago quarter’s reported figure. CELH has delivered an earnings surprise of 42.9%, on average, in the trailing four quarters.

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This article originally published on Zacks Investment Research (zacks.com).

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