Stocks and Shares ISA investors have a lot of attractive options, even with the FTSE 100 above 10,000 points these days. But there’s one, whose share price has slumped from its highs of a few years ago, that I think could be set for a storming comeback.

I’m talking about Diageo (LSE: DGE), one of the world’s champion booze sellers. And how can booze go out of fashion? Well, it’s all about soaring inflation and the pressure that’s putting on disposable incomes. We’ve seen such times before. But this time it’s hitting globally, and Diageo’s market is international.

So why am I upbeat about the prospects for the company behind such world-beating favourites as Johnnie Walker, Guinness, and Smirnoff?

The outlook

The way the Diageo share price has gone, analysts must surely be expecting a few shocking years of company performance right now. And that’s the kind of thing that could take it firmly off my list of Stocks and Shares ISA candidates. Here’s what the City forecasters see happening between 2025 and 2028:

• Earnings per share growth of 61%
• Price-to-earnings (P/E) falling from 23 to 12
• Net debt dropping from $21.5bn to $15.6bn

Now, hang on… that doesn’t sound like a sell-and-go-away stock to me.

But there are other issues, of course. With February’s interim results, the company reported a 4% decline in net sales — with operating profit down 1.2%. For the full year, management lowered its guidance to suggest a 2%-3% fall in organic net sales.

It’s all down to a decline in volumes and a lower price mix — mainly from markets in North America and China. The pains of international trade tariffs can’t be helping.

The plan

Part of the remedial work involves cutting the dividend in half. We should be looking at an unexciting 2.8% to 3% yield for the full year, depending on which forecaster we ask. That’s not brilliant. But it’s not a disaster either.

The share price crunched down on the day of the announcement. And at the time of writing, it’s fallen 22% since market close on the eve of the results. But quite a few commentators believe the sell-off was overdone — and I’m one of them.

Debt forecasts are looking better now. But net debt had been growing uncomfortably over the past few years. And seeing a company paying high dividends while that’s happening always makes me a bit nervous.

The biggest positive sign I see of a turnaround for Diageo is in the form of a person. It’s Sir Dave Lewis, previously the force behind Tesco‘s impressive turnaround — and now brought in to try to do the same here.

Competitive strategy

Sir Dave revealed three immediate priorities. In his words, they are:

• “Build competitive category strategies, winning with relevant brands“
• “Customer, customer, customer“
• “Redesign of the Diageo operating framework to drive sustainable returns“

There are difficult days ahead, for sure. And I could see further Diageo share price weakness before things get better. But Stocks and Shares ISA investors are in it for the long term. And I definitely rate Diageo as one to consider.