Eli Lilly and Company (LLY) Stock Valuation — PE Analysis
Drug Manufacturers - General · NYSE
Current Price
$1133.00
PE Ratio (TTM)
40.1x
Intrinsic Value
$1,931.36
+41.3% margin of safety
COMPETITIVE MOAT
↑Obesity Drug Dominance
Eli Lilly's strong momentum in obesity drugs, fueled by promising data and coverage expansion, creates a significant competitive advantage. This leadership position is difficult for rivals to quickly replicate.
↑Pipeline Innovation Power
A robust pipeline of novel therapeutics, particularly in areas like obesity and Alzheimer's, provides a continuous stream of potential blockbusters. This innovation engine drives future growth and market share.
↑Brand and Regulatory Hurdles
Established brand recognition and the high cost and complexity of drug development and regulatory approval create substantial barriers to entry. New competitors face immense challenges in gaining market access.
INVESTMENT RISKS
↓Policy and Investment Uncertainty
Scaling back investments in key markets like Germany due to policy concerns highlights potential regulatory headwinds. This can impact future expansion and profitability.
↓Intensifying Competition
While Eli Lilly leads in obesity, the sector is attracting significant investment. Competitors are actively developing their own treatments, which could erode market share over time.
↓Pricing and Reimbursement Pressures
The success of blockbuster drugs is increasingly tied to payer negotiations and government policies. Any adverse changes in pricing or reimbursement could significantly impact revenue.
Base case
LLY base case PE valuation
A base case PE valuation for LLY estimates a fair value of about $1,931.36 per share, against a current price of $1,133. The model assumes 20.0% annual earnings growth, a 40x target PE multiple, and a 10% discount rate.
Intrinsic Value
$1,931.36
Margin of safety
+41.3%
Expected annual return
+11.3%
Base case assumptions: 20.0% annual earnings growth, 40x target PE, 10% discount rate, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the LLY PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Eli Lilly and Company respond.
Open PE Calculator for LLYCompany Overview
Eli Lilly and Company is a prominent global pharmaceutical firm dedicated to the research, development, and commercialization of human medicines across the world. Its therapeutic offerings include a comprehensive suite of diabetes medications. This encompasses various insulin formulations like Basaglar, the Humalog family (e.g., Mix 75/25, U-100, U-200, Mix 50/50), insulin lispro products (including protamine and mix 75/25), and the Humulin line (e.g., 70/30, N, R, U-500). Furthermore, Eli Lilly provides specialized treatments for type 2 diabetes, such as Jardiance, Trajenta, and Trulicity. In oncology, Eli Lilly offers a robust portfolio targeting various cancers. These include Alimta for non-small cell lung cancer (NSCLC) and malignant pleural mesothelioma; Cyramza, indicated for metastatic gastric cancer, gastro-esophageal junction adenocarcinoma, metastatic NSCLC, metastatic colorectal cancer, and hepatocellular carcinoma; Erbitux for colorectal and various head and neck cancers; Retevmo, used in metastatic NSCLC, medullary thyroid, and other thyroid cancers; Tyvyt for relapsed or refractory classic Hodgkin's lymphoma and non-squamous NSCLC; and Verzenio, prescribed for HR+, HER2- metastatic breast cancer, node-positive, and early breast cancer. For autoimmune and inflammatory conditions, the company markets Olumiant for rheumatoid arthritis, and Taltz, which addresses plaque psoriasis, psoriatic arthritis, ankylosing spondylitis, and non-radiographic axial spondyloarthritis. Addressing neurological and pain management needs, Eli Lilly provides Cymbalta for depressive disorder, diabetic peripheral neuropathic pain, generalized anxiety disorder, fibromyalgia, and chronic musculoskeletal pain. Emgality is available for migraine prevention and episodic cluster headaches, while Zyprexa treats schizophrenia, bipolar I disorder, and aids in bipolar maintenance. Other significant products include Bamlanivimab and etesevimab, along with Bebtelovimab, both developed for COVID-19. Cialis is offered for erectile dysfunction and benign prostatic hyperplasia, and Forteo is available for osteoporosis. Eli Lilly actively engages in strategic collaborations with numerous partners, including Incyte Corporation; Boehringer Ingelheim Pharmaceuticals, Inc.; AbCellera Biologics Inc.; Junshi Biosciences; Regor Therapeutics Group; Lycia Therapeutics, Inc.; Kumquat Biosciences Inc.; Entos Pharmaceuticals Inc.; and Foghorn Therapeutics Inc. Established in 1876, Eli Lilly and Company maintains its corporate headquarters in Indianapolis, Indiana.
Financial Metrics — LLY PE Stock Valuation Data
PE Ratio (TTM)
40.1x
PEG Ratio
0.31
Earnings Yield
2.49%
ROE (TTM)
101.3%
Revenue/Share (TTM)
$80.77
Dividend Yield
0.57%
Debt/Equity
1.39x
Frequently Asked Questions
What is the PE ratio of LLY?
The trailing twelve-month PE ratio of LLY reflects how much investors pay per dollar of Eli Lilly and Company's earnings. This metric is most useful when compared to Drug Manufacturers - General peers and the company's own historical range.
Is LLY overvalued based on PE ratio?
LLY's PE of 40.1x combined with a PEG ratio of 0.31 provides a growth-adjusted perspective. A PEG below 1.0 suggests LLY may be undervalued relative to its earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Drug Manufacturers - General, a DCF analysis may be more appropriate.
How do I value LLY stock using PE ratio?
To value Eli Lilly and Company using PE: (1) Compare the current PE (40.1x) against the Drug Manufacturers - General median to assess relative pricing, (2) check the PEG ratio (0.31) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of LLY?
LLY's PEG ratio is 0.31, calculated by dividing the PE ratio (40.1x) by the expected earnings growth rate. A PEG below 1.0 is traditionally considered a sign of undervaluation — the market may not be fully pricing in the growth potential. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for LLY stock valuation?
PE ratio gives a quick relative read — how LLY is priced versus Drug Manufacturers - General peers. DCF provides an absolute value based on projected free cash flows. For LLY, with a strong ROE of 101.3%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See LLY DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Healthcare valuationsP/E and DCF value LLY with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.