I’ve been pondering rather a lot concerning the Diageo (LSE: DGE) share price currently. That’s what occurs after I purchase a restoration inventory that doesn’t get better.

I piled into the FTSE 100 stalwart final January, hoping to make the most of a dip in its share price after a gross sales hunch in its Latin American and Caribbean markets triggered a revenue warning.

As a worth investor, I like snapping up out-of-favour firms to profit when their fortunes get better. Onerous expertise has taught me this requires endurance although, and meaning rather a lot longer than 12 months. So why am I getting itchy?

Can this ailing FTSE 100 inventory get its chew again?

In my darker moments, I feel it may very well be sport over for Diageo shares. Clearly, that’s ridiculous. This can be a £52bn firm with iconic manufacturers like Johnnie Walker, Baileys, and Smirnoff. It additionally occurs to be the proud proprietor of the world’s most trendy drink, good outdated Guinness.

That hasn’t stopped its shares falling 15% over the previous yr and 36% over three. Can it get its fizz again?

The Latin American issues are dragging on. The hunch was partly down to native drinkers downgrading to cheaper manufacturers than the premium ones Diageo now specialises in. Nevertheless it additionally suffered stock points. Has administration misplaced its edge for the reason that glory days underneath inspirational CEO Ivan Menezes?

Drinkers within the US, Europe, and China are feeling the pinch. Usually, I’d brush that off as a cyclical concern, saying they’ll really feel thirsty quickly sufficient once they have a bit more money of their pockets.

My concern is that youthful persons are ingesting much less alcohol amid wellness tendencies and well being considerations. If this generational shift is a greater than a passing pattern, Diageo may endure.

If younger folks drink much less, even us oldies might begin to change into self-conscious about our personal refuelling habits. Whereas Diageo has a fantastic alternative in its alcohol-free Guinness 0,0, I don’t see this as transferable throughout its spirits catalogue.

The drinks sector wants a little bit pick-me-up

President-elect Donald Trump has mooted 25% tariffs on imports from Mexico. That’s a fear for Diageo, as its subsidiaries shipped greater than 25m litres of tequila to the US final yr, together with manufacturers Don Julio and Casamigos.

Given these worries, I’ve even thought-about promoting my Diageo shares, that are price 12% lower than I paid. So what stopped me?

Effectively, folks have been ingesting booze for millennia. What are the probabilities of them stopping on my watch? Additionally, because the tobacco giants confirmed, there’s some huge cash to be made in a declining sector. Diageo is a world firm, and center courses in rising markets are upgrading to premium spirits.

Whereas the yield is a comparatively modest 3.36% right now, Diageo has a strong coverage of mountaineering shareholder payouts. Let’s see what the chart says.

Chart by TradingView

Whereas I dither, Diageo shares proceed to stumble. They appear shockingly low cost buying and selling at simply 16.9 instances earnings. I keep in mind once they traded at 24 or 25 instances.

The 20 analysts providing one-year share price forecasts have produced a median goal of simply over 2,705p. If appropriate, that’s up round 15% from right now. Even that doesn’t excite me. I’m clearly feeling glass half-empty in the direction of the inventory. I’ll maintain, however I gained’t purchase extra.