Is Eli Lilly and Company (LLY) overvalued?
On Equity Rank's model estimate, LLY trades 104% above its fair value. Eli Lilly and Company (LLY) last closed at $1,354.00; the multi-method model fair value is $663.67.
| Price | Model fair value | Price vs model |
|---|---|---|
| $1354.00 | $663.67 | 104% above |
What the answer rests on
- 1 of 10 valuation methods put LLY's value above its price and 9 put it below, so the methods mostly agree.
- To justify today's price, LLY's free cash flow would need to grow about 24.0% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 24.9% a year.
- LLY trades at 45.7 times its last year's earnings, against a median of 27.2 for 14 profitable Drug Manufacturer companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 51% above to 121% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind LLY's fair value · What prices assume · Other companies