What a few weeks for Diageo (LSE: DGE) shares! After a long slide over the last four years – and with the share price falling 66% from top to bottom – it looked like all hope might be lost for the proprietor of Guinness and Smirnoff. Many were looking at this stock as one to avoid like the plague.

But the last few weeks might have put paid to all that. A few brilliant bits of news have fallen into the company’s lap. The share price has reversed a sizeable chunk of the losses. And if this is a sign of blue skies ahead, then it looks like the turnaround could be on – and investors could still buy in at a serious discount from previous highs.

What happened?

What’s been the cause of the reversal in fortunes? Well, the brightest bit of news was a strong Q3 update. The firm reiterated full-year guidance. This might not seem all that spectacular, but it’s a welcome bit of plain sailing after a string of profit warnings.

The share price was also boosted from a most unlikely source – the President of the USA. After the King’s visit to the States, Donald Trump generously chose to remove all tariffs on scotch whisky. That’s good news for the Johnnie Walker brand in the firm’s largest market.

It should also be pointed out, however, that the share price increase is not huge – around 15% in total. That could mean that there is the kind of volatility that all stocks go through. The stock enjoyed a previous 15% increase in February of this year, only to lose all that and more after the dividend got slashed.

Looks cheap

Perhaps the brightest spot of all is that long-term worries like changing consumption patterns do not seem to be showing up in the numbers yet. The concern stems from folks drinking less – often put down to the effects of new GLP-1 drugs, people being ‘sober curious’, and the differing habits of the young ‘uns in Gen Z.

But this isn’t the wrecking ball that some had feared. Revenue has stayed around the £20bn mark for the last four years (although, that is a small net decrease with inflation). Analysts have predicted growth every year up to 2029 too.

And after the shares have fallen so much, Diageo looks like a bit of a bargain. The price-to-earnings ratio of 18 is trading at a serious discount to the 10-year average P/E of 24.

On balance? The next few years will be interesting for Diageo shares as we see whether the current fall was justified or simply a great chance to buy in. Personally? I think the stock is worth considering.

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John Fieldsend has positions in Diageo shares.