From the end of 2021 Diageo (LSE:DGE) share price has been a huge hangover for shareholders of the global drinks giant. Since the post-Covid party boom in 2021, it’s FTSE100 the share fell almost continuously. But could there finally be airy at the end of the tunnel?

Diageo exit

On New Year’s Eve 2021, Diageo shares reached 4,036p – their highest closing price. Unfortunately, the share price has been unwell since then. On March 23, it hit a 52-week low of 1,350p, down two-thirds (-66.6%) from its record high.

At this point, many shareholders would despair. I know because I am in this group. My family portfolio purchased this stock for 2,806.6 per year in January 2024. When the stock bottomed on March 23 (down 51.9% from our initial price), I considered cutting my losses.

Perhaps, however, the situation for Diageo’s owners will finally start to look up. On Thursday, May 7, the company’s shares closed at 1,534.2 pence, valuing the group at £34.9 billion. This is 13.6% above the 2026 low, and the company’s shares rose after the release of its third quarter report on Wednesday, May 6.

Turning point?

With shares down 29.1% in one year and 53.3% in five years (excluding cash dividends), Diageo’s owners are desperate for good news. Fortunately, the latest trade data provided some glimmers of hope.

With the FIFA World Cup taking place from June 11 to July 19, wholesale customers started sourcing alcohol for pubs, clubs and bars. Group sales increased by 0.3%, well above the forecast of a 2.3% decline in the three months to April. If this early improvement continues, it will be a good start for modern CEO Sir Dave “Drastic” Lewis.

While sales in Latin America rose 16.2%, sales fell 9.4% in the key US market, with spirits extremely faint. In comparison, sales in Europe increased by 8.8% for pints of the popular stout Guinness leader.

To invest in growing brands and markets, Lewis announced a cut to Diageo’s dividend in overdue February. The turnaround specialist also plans to cut prices and reduce the group’s net debt.

Cheap shots?

Diageo shares are currently trading at 19.6 times historical earnings and offer a dividend yield of 3.9% per annum. However, this cash yield will decline again when the reduced final dividend is revealed. While this stock doesn’t look wildly overpriced, it’s also not an obvious bargain buy.

To me, participating in Footsie seems like a binary bet – either a recovery game or a value trap. If the world’s biggest soccer tournament goes well, sales could raise significantly. Personally, I would like to see sales and margins rebound while keeping costs under tight control.

All in all, there were no major upheavals in Sir Dave Lewis’s first four months in office. For now, I’m cheerful to give him a full year or more to fix this tanker. That said, if Diageo continues to struggle, 2026 could be the last year my family owns this once proudly British company!