As of August 31, 2025, Eli Lilly and Co's estimated intrinsic value ranges from $73.81 to $681.78 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $631.15 | -13.8% |
| Discounted Cash Flow (5Y) | $498.17 | -32.0% |
| Dividend Discount Model (Multi-Stage) | $467.55 | -36.2% |
| Dividend Discount Model (Stable) | $681.78 | -6.9% |
| Earnings Power Value | $73.81 | -89.9% |
Is Eli Lilly and Co (LLY) undervalued or overvalued?
With the current market price at $732.58, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Eli Lilly and Co's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.49 | 0.53 |
| Cost of equity | 6.1% | 7.9% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 12.3% | 15.2% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 6.0% | 7.7% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $498 | $508,028M | 88.6% |
| 10-Year Growth | $631 | $633,889M | 79.2% |
| 5-Year EBITDA | $196 | $222,008M | 74.0% |
| 10-Year EBITDA | $293 | $313,494M | 57.9% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $7,174M |
| Discount Rate (WACC) | 7.7% - 6.0% |
| Enterprise Value | $93,517M - $119,259M |
| Net Debt | $36,528M |
| Equity Value | $56,989M - $82,732M |
| Outstanding Shares | 946M |
| Fair Value | $60 - $87 |
| Selected Fair Value | $73.81 |
| Metric | Value |
|---|---|
| Market Capitalization | $693358M |
| Enterprise Value | $729886M |
| Trailing P/E | 50.24 |
| Forward P/E | 55.12 |
| Trailing EV/EBITDA | 7.40 |
| Current Dividend Yield | 72.58% |
| Dividend Growth Rate (5Y) | 14.88% |
| Debt-to-Equity Ratio | 0.05 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $189.35 |
| Discounted Cash Flow (5Y) | 25% | $124.54 |
| Dividend Discount Model (Multi-Stage) | 20% | $93.51 |
| Dividend Discount Model (Stable) | 15% | $102.27 |
| Earnings Power Value | 10% | $7.38 |
| Weighted Average | 100% | $517.05 |
Based on our comprehensive valuation analysis, Eli Lilly and Co's intrinsic value is $517.05, which is approximately 29.4% below the current market price of $732.58.
Key investment considerations:
Given these factors, we believe Eli Lilly and Co is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.