Eli Lilly and Co Stock Is Estimated To Be Modestly Overvalued
In This Article:
- By GF Value
The stock of Eli Lilly and Co (NYSE:LLY, 30-year Financials) is estimated to be modestly overvalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $186.82 per share and the market cap of $179.2 billion, Eli Lilly and Co stock is estimated to be modestly overvalued. GF Value for Eli Lilly and Co is shown in the chart below.
Because Eli Lilly and Co is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth, which averaged 12.3% over the past three years and is estimated to grow 6.85% annually over the next three to five years.
Link: These companies may deliever higher future returns at reduced risk.
It is always important to check the financial strength of a company before buying its stock. Investing in companies with poor financial strength have a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a company. Eli Lilly and Co has a cash-to-debt ratio of 0.22, which is worse than 77% of the companies in Drug Manufacturers industry. The overall financial strength of Eli Lilly and Co is 5 out of 10, which indicates that the financial strength of Eli Lilly and Co is fair. This is the debt and cash of Eli Lilly and Co over the past years:
Companies that have been consistently profitable over the long term offer less risk for investors who may want to purchase shares. Higher profit margins usually dictate a better investment compared to a company with lower profit margins. Eli Lilly and Co has been profitable 9 over the past 10 years. Over the past twelve months, the company had a revenue of $24.5 billion and earnings of $6.693 a share. Its operating margin is 27.91%, which ranks better than 92% of the companies in Drug Manufacturers industry. Overall, the profitability of Eli Lilly and Co is ranked 8 out of 10, which indicates strong profitability. This is the revenue and net income of Eli Lilly and Co over the past years: