Eli Lilly and Co (LLY, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $828.65, Eli Lilly and Co has witnessed a daily loss of 1.35%, marked against a three-month change of 11.82%. A thorough analysis, underlined by the GF Score, suggests that Eli Lilly and Co is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 7/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a GF Score of 97 out of 100, Eli Lilly and Co signals the highest outperformance potential.
Company Overview: Eli Lilly and Co
Eli Lilly and Co is a prominent player in the pharmaceutical industry, with a market capitalization of $744.12 billion and sales amounting to $45.04 billion. The company boasts an impressive operating margin of 38.86%. Eli Lilly focuses on neuroscience, cardiometabolic, cancer, and immunology, with key products including Verzenio for cancer; Mounjaro, Zepbound, Jardiance, Trulicity, Humalog, and Humulin for cardiometabolic; and Taltz and Olumiant for immunology.
Financial Strength Breakdown
According to the Financial Strength rating, Eli Lilly and Co's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Eli Lilly and Co stands impressively at 22.42, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 8.47, Eli Lilly and Co exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.75, Eli Lilly and Co's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Eli Lilly and Co's impressive standing among its peers in generating profit. Eli Lilly and Co's Operating Margin has increased (32.23%) over the past five years, as shown by the following data: 2020: 29.38; 2021: 28.01; 2022: 30.32; 2023: 31.61; 2024: 38.86.
Furthermore, Eli Lilly and Co's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2020: 77.66; 2021: 74.18; 2022: 76.77; 2023: 79.25; 2024: 81.31. This trend underscores the company's growing proficiency in transforming revenue into profit. The Piotroski F-Score confirms Eli Lilly and Co's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency.
Eli Lilly and Co's strong Predictability Rank of 3.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Eli Lilly and Co demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 17.1%, which outperforms better than 81.17% of 903 companies in the Drug Manufacturers industry.
Moreover, Eli Lilly and Co has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 24.1, and the rate over the past five years is 12.5. This trend accentuates the company's continued capability to drive growth.
Conclusion
In conclusion, Eli Lilly and Co's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. The company's strategic initiatives, robust financial health, and consistent growth trajectory make it a compelling choice for value investors seeking long-term gains. As the pharmaceutical industry continues to evolve, Eli Lilly and Co's innovative approach and strong market presence position it well for future success.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
