Calling the formerTesco CEO Sir Dave Lewis looks like good news for Diageo (LSE: DGE) investors who want their share price to rise again.

He has an impressive record of achievements behind him.

So what does he have to deal with? The chart below shows dismal results five years from now. However, since the news was published, Diageo’s share price has already increased by approximately 8%.

Optimistic analysts

Analysts have already been generally positive about Diageo, with most rating the stock a Buy. They also see improved results on the horizon.

The year to June 2025 was tough. In the first quarter of 2025/26, management lowered its full-year forecasts due to weakness in China and the US.

However, forecasts suggest that 2026 could be the year that earnings recovery begins, with earnings per share expected to augment by 75% by 2028. That wouldn’t mean a return to 2023 levels anyway, would it?

Experts also see a return to the dynamics of dividend growth, after the payment in 2025 was maintained at the previous year’s level. The city expects a profitability of approximately 4.2%.

New boss

Shareholders will have great expectations placed on the shoulders of the modern boss. Diageo’s first half results will be announced on February 25. That’s how it should be when we first hear about his plans to shake up the company – unless we get some special updates before then.

So what can he do? Sir Dave made a mighty takeover of Tesco in 2014. Tesco has become involved in too many businesses. He also made disastrous forays into the international food business.

But before he retired in 2020, Tesco returned to what it did best. Today it controls 28% of the UK grocery market and that number is growing – even in the face of budget retailers such as Aldi and Lidl.

Divestments will almost certainly feature in Diageo’s future plans. Already in the first quarter of November, the management board talked about “appropriate and selective divestitures in the coming years“I assume the plan will be accelerated.

What should investors do?

At a price-to-earnings (P/E) ratio of 14, the stock looks inexpensive to me. And if, as I hope, this year is a turn towards earnings growth, they may even be inexpensive. Existing forecasts lower the P/E to 13 in 2028. However, this does not take into account what the modern CEO might do.

What would I like to see? I hope Diageo will abandon some of its underperforming brands and focus on long-term hits. Who wants Don Papa rum, rated low by drinkers when we can have massive sales Captain Morgan?

I hope that the balance sheet will also strengthen. I estimate that net debt of $21.9 billion as of June 30 is far from ideal, and the ratio of net debt to adjusted EBITDA is as high as 3.4 times.

I’ll definitely check out the February update. But even knowing Sir Dave’s track record, I’m already considering investing.