Diageo (LSE: DGE) shares have experienced a mind-blowing fall. Currently, they’re trading near 1,450p – a level not seen since 2012.

Is there an investment opportunity to consider here? Let’s take a look.

The picture looks grim

It’s easy to see why Diageo’s share price has dipped. Right now, this Footsie company’s a bit of a mess.

Last month, new CEO Dave Lewis told investors that sales will probably fall 2%-3% this financial year (ending 30 June). That was after a 4% drop for the first half of the financial year.

Additionally, Lewis slashed the dividend payout. A few of us here at The Motley Fool were expecting this, but it was still painful to see it actually happen – for a long time this company was a dividend growth superstar (20+ years of consecutive increases).

What’s gone wrong? A lot of things. For a start, Diageo’s ‘premiumisation’ strategy has backfired massively. These days, a lot of consumers just don’t have the cash for top-shelf products such as Don Julio and Casamigos.

Secondly, GLP-1 weight loss drugs and the increasing focus on health and exercise have reduced demand for alcoholic products. Third, the group has some financial issues – not only does it have a large debt pile but US tariffs have taken a chunk out of profits.

Reasons to be optimistic

Having said all that, there are still reasons to be bullish here. It has a portfolio of legendary brands. One worth highlighting is Guinness – this brand’s really in vogue right now (especially with younger drinkers).

Meanwhile, Lewis – whose nickname is ‘Drastic Dave’ – has plenty of options when it comes to moves that could boost operational performance. Examples include having developed no-alcohol versions of Guinness, selling smaller bottles of tequila, selling off brands to free up cash and pay down debt, and cutting marketing and administration costs with artificial intelligence (AI).

Turning to the valuation, it’s at very low levels right now. Looking at analysts’ earnings forecasts, the forward-looking price-to-earnings (P/E) ratio’s only about 12 (below the UK market average).

Finally, there’s the dividend. Even after the recent cut, we’re still looking at a yield of about 3.4%. That obviously isn’t high but if interest rates were to fall and savings accounts started paying less interest, it could start to look attractive (note that the company plans to grow the payout going forward).

Worth a look today?

Personally, I’ve been adding to my position in the drinks company, buying more shares near 1,595p. This move hasn’t paid off yet, but by taking a long-term view, I’m optimistic it will.

In my view, the shares are worth considering at current levels – I believe there’s potential for a turnaround. However, it goes without saying that a turnaround isn’t guaranteed so investors may want to explore other opportunities in the market too.