Eli Lilly trades at $759 per share and has stayed right on track with the overall market, losing 6.5% over the last six months while the S&P 500 is down 2.4%. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Given the weaker price action, is this a buying opportunity for LLY? Find out in our full research report, it’s free.
Why Is LLY a Good Business?
Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE: LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Eli Lilly’s 16.2% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Eli Lilly’s EPS grew at an astounding 17.6% compounded annual growth rate over the last five years, higher than its 16.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Stellar ROIC Showcases Lucrative Growth Opportunities
Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).
Eli Lilly’s five-year average ROIC was 25.8%, placing it among the best healthcare companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.
Final Judgment
These are just a few reasons why Eli Lilly is one of the best healthcare companies out there. With the recent decline, the stock trades at 29.8× forward P/E (or $759 per share). Is now a good time to buy? See for yourself in our full research report, it’s free.
Stocks We Like Even More Than Eli Lilly
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
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