Title
Earning Preview: Diageo PLC this quarter’s revenue is expected to decrease by 0.88%, and institutional views are bullish
Abstract
Diageo PLC will report quarterly results on February 25, 2026 Pre-Market, with investors focused on a projected sequential revenue recovery, an EPS step-up versus last quarter, and management’s commentary on margins, costs, and cash discipline amid a modest year-over-year revenue decline.
Market Forecast
For the current quarter, market projections imply revenue of $10.47 billion, a year-over-year decrease of 0.88%, and an EPS estimate of 3.71, a year-over-year decline of 8.62%. While margin guidance is not explicitly available, the implied sequential uplift from the prior quarter indicates expectations for a moderate rebound in top-line and earnings cadence.
The main business is expected to show a sequential expansion, supported by price/mix resilience and ongoing cost control, even as year-over-year comparisons remain slightly negative. Within the core portfolio, net sales are projected at $10.47 billion (down 0.88% year over year), positioning the quarter for a modest improvement versus the prior period’s $9.34 billion.
Last Quarter Review
In the last reported quarter, Diageo PLC delivered revenue of $9.34 billion, with a gross profit margin of 58.83%, GAAP net profit attributable to shareholders of $210.00 million, a net profit margin of 4.48%, and EPS of 2.65, reflecting a 7.14% year-over-year decline; revenue decreased 3.34% year over year.
A key financial highlight was EBIT of $2.33 billion, which surpassed the quarter’s consensus by $130.27 million despite a 4.23% year-over-year contraction, underscoring effective expense management and operating resilience. From a top-line perspective, net sales of $9.34 billion contracted by 3.34% year over year, setting a lower base for the forecasted sequential recovery now embedded in current-quarter expectations.
Current Quarter Outlook
Core revenue trajectory
The forecast implies that Diageo PLC’s net sales should rebound on a sequential basis, from $9.34 billion last quarter to $10.47 billion this quarter, which equates to an approximate 12.06% quarter-over-quarter increase. On a year-over-year basis, the revenue estimate suggests a 0.88% decline, signaling that while volumes and price/mix may not fully outpace the prior-year comparison, the direction of travel quarter-over-quarter is constructive. This pattern is consistent with a quarter where price carryover and disciplined promotional activity can support the top line even as certain demand pockets remain uneven.
Earnings power is expected to improve sequentially as well: the EPS estimate of 3.71 compares with 2.65 delivered last quarter, implying an approximately 40% quarter-over-quarter uplift. Combining the sequential revenue step-up with last quarter’s demonstrated cost control and an EBIT outperformance versus estimates, the setup points to potential operating leverage in this quarter, provided that spending phasing and input costs remain aligned with plan. In the absence of explicit margin guidance, investors will focus on incremental color around gross margin drivers and the cadence of marketing reinvestment, as these variables will determine the durability of a sequential profit rebound.
Foreign-exchange effects, cost pass-through, and logistics normalization are likely to play into the quarter’s narrative. While FX can be a swing factor for translated results, the reported revenue and EPS targets already reflect prevailing consensus assumptions and suggest only mild year-over-year pressure. The quarter’s success ultimately depends on maintaining price/mix integrity and executing against spending windows that protect brand equity while avoiding margin slippage.
Most promising business in the current setup
Within Diageo PLC’s portfolio framework, the most promising contributor this quarter is the anticipated normalization in core net sales run-rate, which is captured in the revenue estimate of $10.47 billion, down only 0.88% year over year and notably up versus the last quarter. This trajectory indicates an improving balance between pricing effects and volume trends relative to the immediate prior period, setting the stage for a more stable revenue base. In turn, this creates a foundation for better fixed-cost absorption and improved EBIT conversion if operating expenses track the plan signaled by last quarter’s execution.
The edge in this quarter is not about a single product line but rather about the consistency of performance across the core portfolio where price/mix initiatives and targeted marketing are already in motion. The prior quarter’s EBIT outperformance suggests a credible handle on controllable costs, which can enable Diageo PLC to support strategic brand investment while preserving profitability. If this quarter confirms the revenue step-up and demonstrates that investment spending remains focused and efficient, the core franchise could deliver an incremental improvement in operating margin trajectory on a sequential basis.
From a shareholder perspective, the combination of a measured year-over-year revenue decline with a stronger quarter-over-quarter print can be constructive if it is accompanied by transparent commentary on the sustainability of cost actions and the expected phasing of further investments. This pattern would help investors recalibrate run-rate earnings and carry a more balanced view into subsequent quarters.
Key stock-price swing factors this quarter
Three elements are poised to influence the share price reaction around this print: delivery versus top-line expectations, the margin narrative, and qualitative guidance updates. First, delivery versus the $10.47 billion revenue estimate will likely anchor the immediate reaction; a miss or beat of even low single-digit percentage magnitude can translate into meaningful price volatility given the quarter’s slim year-over-year delta. Second, the margin narrative—how gross margin compares with last quarter’s 58.83% and how management frames reinvestment versus savings—will shape the extent to which EPS can track or exceed the 3.71 estimate.
Third, qualitative guidance, including commentary on spend phasing, inventory health, and cash conversion, will be pivotal to the medium-term earnings path. Last quarter’s EBIT beat of $130.27 million showed that cost control can offset revenue softness; the degree of repeatability and discipline in this quarter will set the tone for subsequent quarters. Investors will also monitor any updates tied to portfolio actions and regional exposures, as developments here can influence both mix and capital allocation in the remainder of the fiscal year.
FX sensitivity remains a background factor and could either modestly help or hurt translated results, but it is unlikely to overwhelm the fundamental narrative unless currency moves diverge materially from assumptions baked into forecasts. In practice, the market will focus on whether sequential revenue and EPS momentum can be validated and whether management signals that these improvements are sustainable into the next period.
Analyst Opinions
Based on identifiable brokerage commentary since January 1, 2026, the ratio of bullish to bearish views skews to the bullish side (100% bullish in our tracked sample for the period), with notable positive input from a major bank that upgraded Diageo PLC to Outperform with a price target set in local currency. That upgrade aligns with the view that the current quarter could mark a sequentially stronger performance versus the immediately preceding period, supported by tighter operating discipline and a measured top-line uplift. Additionally, an aggregated snapshot in early January showed an average stance characterized as overweight alongside a mean target price in local currency, which further underscores constructive sentiment into this release window.
The bullish camp highlights three points that intersect with the quantitative setup. First, the forecasted revenue of $10.47 billion represents a meaningful sequential gain relative to last quarter’s $9.34 billion, a constructive sign even if the year-over-year change remains slightly negative at 0.88%. Second, the EPS estimate of 3.71 implies a sharp sequential rebound from 2.65 last quarter, making the margin narrative and investment phasing central to the upside case; this view is bolstered by the prior quarter’s EBIT outperformance of $130.27 million despite a 4.23% year-over-year decline, indicating management’s effectiveness in controlling costs. Third, investors in the bullish camp expect that commentary on expenses, working capital, and forward phasing will provide sufficient clarity to maintain confidence in the run rate, even if near-term growth metrics are not uniformly positive.
From a positioning perspective around the print, bullish analysts are effectively betting that a sequentially improving top-line and a disciplined cost structure will outweigh the modest year-over-year revenue decline and the softer year-over-year EPS comparison. The key yardstick is execution: delivering close to or above the $10.47 billion revenue estimate and defending margin quality despite reinvestment needs. If the company lands an EPS outcome consistent with or ahead of the 3.71 estimate, it would validate the idea that the prior quarter’s cost controls can coexist with growth-focused spending, supporting more durable earnings power into subsequent periods.
The upgraded rating and supportive consensus tone are therefore contingent on confirmation of the quarter’s revenue and EPS cadence and on the strength of management’s qualitative framework for the next stretch of the fiscal year. A transparent update that reconciles sequential improvements with prudent reinvestment should keep the majority bullish argument intact and reduce uncertainty around the earnings trajectory.
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