ELI LILLY & Co (NYSE: LLY)

Sector: Healthcare Industry: Drug Manufacturers - General CIK: 0000059478
Market Cap 1,096.48 Bn
P/B 74.91
P/E 444.66
P/S 53.21
ROIC (Qtr) 31.21
Div Yield % 0.36
Rev 1y % (Qtr) 42.55
Total Debt (Qtr) 42.50 Bn
Debt/Equity (Qtr) 1.60
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About

Eli Lilly and Company, commonly referred to as Lilly, is a prominent player in the pharmaceutical industry, operating under the ticker symbol LLY. The company's operations are centered on the discovery, development, manufacturing, and marketing of human pharmaceutical products, with a global footprint spanning approximately 105 countries. Lilly's primary business activities revolve around the development and commercialization of innovative medicines that target significant unmet medical needs. The company's product portfolio is diverse, encompassing...

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Investment thesis

Bull case

  • Healthy cash reserves of 7.27B provide 4.45x coverage of short-term debt 1.64B, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 16.81B provides strong 26.86x coverage of stock compensation 626M, indicating sustainable incentive practices.
  • Strong operating cash flow of 16.81B provides 1.52x coverage of SG&A expenses 11.09B, showing efficient operational cost management.
  • Robust tangible asset base of 100.06B provides 4.90x coverage of working capital 20.40B, indicating strong operational backing.
  • Operating cash flow of 16.81B fully covers other non-current liabilities 9.85B by 1.71x, showing strong long-term stability.

Bear case

  • Operating cash flow of 16.81B barely covers its investment activities of (10.97B), with a coverage ratio of -1.53, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (10.97B) provide weak support for R&D spending of 13.34B, which is -0.82x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 16.81B provides thin coverage of dividend payments of (5.38B) with a -3.12 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 7.27B provide limited coverage of acquisition spending of (661M), which is -11x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Retained earnings of 24.47B provide limited buffer against comprehensive income items of (2.88B), which is -8.50x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Drug Manufacturers - General
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 LLY ELI LILLY & Co 1,096.48 Bn 444.66 53.21 42.50 Bn
2 JNJ Johnson & Johnson 586.00 Bn 21.86 6.22 47.93 Bn
3 MRK Merck & Co., Inc. 351.73 Bn 29.51 8.33 41.37 Bn
4 ABBV AbbVie Inc. 346.46 Bn 41.07 10.17 68.74 Bn
5 AZN Astrazeneca Plc 324.54 Bn 31.74 5.53 29.62 Bn
6 NVS Novartis Ag 322.29 Bn 23.05 5.69 35.46 Bn
7 GILD Gilead Sciences, Inc. 237.69 Bn 78.03 22.28 24.94 Bn
8 AMGN Amgen Inc 233.95 Bn 29.40 9.93 54.60 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 9.80 2.46
EV to Cash from Ops. EV/CFO 335.70 38.77
EV to Debt EV to Debt 25.93 6.68
EV to EBIT EV/EBIT 366.98 37.43
EV to EBITDA EV/EBITDA 246.90 30.58
EV to Free Cash Flow [EV/FCF] EV/FCF 474.56 50.59
EV to Market Cap EV to Market Cap 1.01 1.31
EV to Revenue EV/Rev 53.50 8.62
Price to Book Value [P/B] P/B 74.91 5.91
Price to Earnings [P/E] P/E 444.66 44.84
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.83 0.95
Dividend Payout Ratio % Div Payout % (Qtr) 26.10 65.78
Dividend per Basic Share Div per Share (Qtr) 6.00 2.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 60.01 40.65
Interest Coverage Interest Coverage 0.00 20.38
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -55.02 -17.39
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 122.40 74.29
Dividend Growth (1y) % Div 1y % (Qtr) 11.11 3.76
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 94.90 71.80
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 92.96 65.77
EBIT Growth (1y) % EBIT 1y % (Qtr) 102.93 63.01
EBT Growth (1y) % EBT 1y % (Qtr) 102.93 306.04
EPS Growth (1y) % EPS 1y % (Qtr) 95.58 348.81
FCF Growth (1y) % FCF 1y % (Qtr) 138.62 11.69
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 47.79 7.99
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.58 0.39
Cash Payout Ratio Cash Payout (Qtr) 0.22 0.28
Cash Ratio Cash Ratio (Qtr) 0.21 2.08
Current Ratio Curr Ratio (Qtr) 1.58 6.16
Debt to Equity Ratio Debt/Equity (Qtr) 1.60 -0.39
Interest Cover Ratio Interest Cover Ratio 0.00 20.38
Times Interest Earned Times Interest Earned 0.00 20.38
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 42.50 -13.64
EBIT Margin % EBIT Margin % (Qtr) 39.48 -10.45
EBT Margin % EBT Margin % (Qtr) 39.48 -25.59
Gross Margin % Gross Margin % (Qtr) 83.00 65.04
Net Profit Margin % Net Margin % (Qtr) 31.70 -34.87