Intrinsic value of Eli Lilly - LLY

Previous Close

$85.49

  Intrinsic Value

$111.38

stock screener

  Rating & Target

buy

+30%

Previous close

$85.49

 
Intrinsic value

$111.38

 
Up/down potential

+30%

 
Rating

buy

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LLY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  6.33
  9.00
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
  6.39
  6.26
  6.13
  6.02
  5.92
  5.82
  5.74
  5.67
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
Revenue, $m
  21,222
  23,132
  25,121
  27,191
  29,344
  31,581
  33,906
  36,322
  38,833
  41,443
  44,158
  46,982
  49,920
  52,980
  56,168
  59,491
  62,955
  66,569
  70,342
  74,281
  78,397
  82,698
  87,195
  91,898
  96,819
  101,968
  107,360
  113,005
  118,918
  125,113
  131,604
Variable operating expenses, $m
 
  5,955
  6,433
  6,931
  7,448
  7,986
  8,544
  9,125
  9,728
  10,355
  11,008
  11,289
  11,995
  12,730
  13,496
  14,294
  15,127
  15,995
  16,902
  17,848
  18,837
  19,871
  20,951
  22,081
  23,263
  24,501
  25,796
  27,153
  28,574
  30,062
  31,622
Fixed operating expenses, $m
 
  12,889
  13,212
  13,542
  13,880
  14,227
  14,583
  14,948
  15,321
  15,704
  16,097
  16,499
  16,912
  17,335
  17,768
  18,212
  18,668
  19,134
  19,613
  20,103
  20,606
  21,121
  21,649
  22,190
  22,745
  23,313
  23,896
  24,494
  25,106
  25,734
  26,377
Total operating expenses, $m
  17,763
  18,844
  19,645
  20,473
  21,328
  22,213
  23,127
  24,073
  25,049
  26,059
  27,105
  27,788
  28,907
  30,065
  31,264
  32,506
  33,795
  35,129
  36,515
  37,951
  39,443
  40,992
  42,600
  44,271
  46,008
  47,814
  49,692
  51,647
  53,680
  55,796
  57,999
Operating income, $m
  3,459
  4,287
  5,476
  6,719
  8,015
  9,368
  10,779
  12,250
  13,784
  15,384
  17,053
  19,193
  21,014
  22,916
  24,904
  26,984
  29,161
  31,440
  33,828
  36,330
  38,954
  41,707
  44,595
  47,627
  50,810
  54,154
  57,667
  61,359
  65,239
  69,317
  73,606
EBITDA, $m
  4,956
  5,925
  7,221
  8,574
  9,986
  11,459
  12,994
  14,595
  16,264
  18,004
  19,819
  21,713
  23,691
  25,757
  27,916
  30,174
  32,537
  35,010
  37,600
  40,314
  43,158
  46,142
  49,271
  52,555
  56,003
  59,623
  63,425
  67,419
  71,616
  76,027
  80,664
Interest expense (income), $m
  146
  293
  365
  440
  518
  599
  683
  771
  862
  957
  1,055
  1,158
  1,264
  1,375
  1,490
  1,610
  1,736
  1,866
  2,002
  2,145
  2,293
  2,448
  2,611
  2,780
  2,957
  3,143
  3,337
  3,540
  3,753
  3,976
  4,210
Earnings before tax, $m
  3,374
  3,994
  5,111
  6,279
  7,497
  8,769
  10,095
  11,479
  12,922
  14,427
  15,998
  18,036
  19,750
  21,541
  23,414
  25,374
  27,425
  29,574
  31,825
  34,185
  36,661
  39,258
  41,984
  44,847
  47,853
  51,011
  54,330
  57,819
  61,486
  65,341
  69,396
Tax expense, $m
  636
  1,078
  1,380
  1,695
  2,024
  2,368
  2,726
  3,099
  3,489
  3,895
  4,319
  4,870
  5,332
  5,816
  6,322
  6,851
  7,405
  7,985
  8,593
  9,230
  9,898
  10,600
  11,336
  12,109
  12,920
  13,773
  14,669
  15,611
  16,601
  17,642
  18,737
Net income, $m
  2,738
  2,916
  3,731
  4,584
  5,473
  6,401
  7,370
  8,379
  9,433
  10,532
  11,679
  13,166
  14,417
  15,725
  17,092
  18,523
  20,020
  21,589
  23,232
  24,955
  26,762
  28,659
  30,649
  32,738
  34,933
  37,238
  39,661
  42,208
  44,885
  47,699
  50,659

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  6,039
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  38,806
  35,698
  38,767
  41,962
  45,284
  48,736
  52,324
  56,053
  59,928
  63,956
  68,145
  72,503
  77,038
  81,760
  86,679
  91,806
  97,153
  102,731
  108,552
  114,632
  120,983
  127,620
  134,560
  141,818
  149,411
  157,359
  165,679
  174,391
  183,516
  193,076
  203,093
Adjusted assets (=assets-cash), $m
  32,767
  35,698
  38,767
  41,962
  45,284
  48,736
  52,324
  56,053
  59,928
  63,956
  68,145
  72,503
  77,038
  81,760
  86,679
  91,806
  97,153
  102,731
  108,552
  114,632
  120,983
  127,620
  134,560
  141,818
  149,411
  157,359
  165,679
  174,391
  183,516
  193,076
  203,093
Revenue / Adjusted assets
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
  0.648
Average production assets, $m
  12,850
  14,018
  15,224
  16,478
  17,782
  19,138
  20,547
  22,011
  23,533
  25,115
  26,760
  28,471
  30,252
  32,106
  34,038
  36,051
  38,151
  40,341
  42,627
  45,014
  47,508
  50,115
  52,840
  55,690
  58,672
  61,793
  65,060
  68,481
  72,064
  75,819
  79,752
Working capital, $m
  4,114
  23
  25
  27
  29
  32
  34
  36
  39
  41
  44
  47
  50
  53
  56
  59
  63
  67
  70
  74
  78
  83
  87
  92
  97
  102
  107
  113
  119
  125
  132
Total debt, $m
  10,305
  10,424
  12,567
  14,796
  17,115
  19,525
  22,029
  24,632
  27,337
  30,148
  33,072
  36,114
  39,279
  42,575
  46,009
  49,588
  53,320
  57,213
  61,277
  65,520
  69,953
  74,586
  79,430
  84,496
  89,796
  95,343
  101,151
  107,232
  113,601
  120,274
  127,266
Total liabilities, $m
  24,798
  24,917
  27,060
  29,289
  31,608
  34,018
  36,522
  39,125
  41,830
  44,641
  47,565
  50,607
  53,772
  57,068
  60,502
  64,081
  67,813
  71,706
  75,770
  80,013
  84,446
  89,079
  93,923
  98,989
  104,289
  109,836
  115,644
  121,725
  128,094
  134,767
  141,759
Total equity, $m
  14,008
  10,781
  11,708
  12,673
  13,676
  14,718
  15,802
  16,928
  18,098
  19,315
  20,580
  21,896
  23,265
  24,692
  26,177
  27,726
  29,340
  31,025
  32,783
  34,619
  36,537
  38,541
  40,637
  42,829
  45,122
  47,522
  50,035
  52,666
  55,422
  58,309
  61,334
Total liabilities and equity, $m
  38,806
  35,698
  38,768
  41,962
  45,284
  48,736
  52,324
  56,053
  59,928
  63,956
  68,145
  72,503
  77,037
  81,760
  86,679
  91,807
  97,153
  102,731
  108,553
  114,632
  120,983
  127,620
  134,560
  141,818
  149,411
  157,358
  165,679
  174,391
  183,516
  193,076
  203,093
Debt-to-equity ratio
  0.736
  0.970
  1.070
  1.170
  1.250
  1.330
  1.390
  1.460
  1.510
  1.560
  1.610
  1.650
  1.690
  1.720
  1.760
  1.790
  1.820
  1.840
  1.870
  1.890
  1.910
  1.940
  1.950
  1.970
  1.990
  2.010
  2.020
  2.040
  2.050
  2.060
  2.070
Adjusted equity ratio
  0.283
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302
  0.302

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,738
  2,916
  3,731
  4,584
  5,473
  6,401
  7,370
  8,379
  9,433
  10,532
  11,679
  13,166
  14,417
  15,725
  17,092
  18,523
  20,020
  21,589
  23,232
  24,955
  26,762
  28,659
  30,649
  32,738
  34,933
  37,238
  39,661
  42,208
  44,885
  47,699
  50,659
Depreciation, amort., depletion, $m
  1,497
  1,638
  1,745
  1,856
  1,971
  2,091
  2,216
  2,345
  2,480
  2,620
  2,765
  2,520
  2,677
  2,841
  3,012
  3,190
  3,376
  3,570
  3,772
  3,984
  4,204
  4,435
  4,676
  4,928
  5,192
  5,468
  5,758
  6,060
  6,377
  6,710
  7,058
Funds from operations, $m
  4,367
  4,554
  5,476
  6,439
  7,444
  8,492
  9,585
  10,725
  11,913
  13,152
  14,444
  15,686
  17,094
  18,566
  20,104
  21,713
  23,396
  25,159
  27,005
  28,939
  30,967
  33,093
  35,325
  37,666
  40,125
  42,707
  45,419
  48,268
  51,262
  54,409
  57,717
Change in working capital, $m
  -484
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  6
Cash from operations, $m
  4,851
  4,552
  5,474
  6,437
  7,442
  8,490
  9,583
  10,722
  11,910
  13,149
  14,441
  15,683
  17,091
  18,563
  20,101
  21,710
  23,393
  25,155
  27,001
  28,935
  30,963
  33,089
  35,320
  37,662
  40,120
  42,702
  45,413
  48,262
  51,256
  54,403
  57,710
Maintenance CAPEX, $m
  0
  -1,137
  -1,241
  -1,347
  -1,458
  -1,574
  -1,694
  -1,818
  -1,948
  -2,083
  -2,223
  -2,368
  -2,520
  -2,677
  -2,841
  -3,012
  -3,190
  -3,376
  -3,570
  -3,772
  -3,984
  -4,204
  -4,435
  -4,676
  -4,928
  -5,192
  -5,468
  -5,758
  -6,060
  -6,377
  -6,710
New CAPEX, $m
  -1,092
  -1,168
  -1,206
  -1,254
  -1,304
  -1,356
  -1,409
  -1,464
  -1,522
  -1,582
  -1,645
  -1,711
  -1,781
  -1,854
  -1,932
  -2,013
  -2,099
  -2,190
  -2,286
  -2,387
  -2,494
  -2,606
  -2,725
  -2,850
  -2,982
  -3,121
  -3,267
  -3,421
  -3,583
  -3,754
  -3,934
Cash from investing activities, $m
  -3,139
  -2,305
  -2,447
  -2,601
  -2,762
  -2,930
  -3,103
  -3,282
  -3,470
  -3,665
  -3,868
  -4,079
  -4,301
  -4,531
  -4,773
  -5,025
  -5,289
  -5,566
  -5,856
  -6,159
  -6,478
  -6,810
  -7,160
  -7,526
  -7,910
  -8,313
  -8,735
  -9,179
  -9,643
  -10,131
  -10,644
Free cash flow, $m
  1,712
  2,247
  3,028
  3,835
  4,679
  5,561
  6,480
  7,440
  8,440
  9,484
  10,574
  11,604
  12,791
  14,031
  15,328
  16,684
  18,103
  19,589
  21,145
  22,775
  24,485
  26,278
  28,160
  30,136
  32,210
  34,389
  36,678
  39,083
  41,612
  44,271
  47,067
Issuance/(repayment) of debt, $m
  2,500
  2,056
  2,143
  2,230
  2,319
  2,410
  2,504
  2,602
  2,705
  2,812
  2,924
  3,042
  3,166
  3,296
  3,434
  3,579
  3,732
  3,893
  4,064
  4,243
  4,433
  4,633
  4,844
  5,066
  5,300
  5,547
  5,807
  6,081
  6,369
  6,673
  6,992
Issuance/(repurchase) of shares, $m
  -600
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  1,599
  2,056
  2,143
  2,230
  2,319
  2,410
  2,504
  2,602
  2,705
  2,812
  2,924
  3,042
  3,166
  3,296
  3,434
  3,579
  3,732
  3,893
  4,064
  4,243
  4,433
  4,633
  4,844
  5,066
  5,300
  5,547
  5,807
  6,081
  6,369
  6,673
  6,992
Total cash flow (excl. dividends), $m
  3,075
  4,302
  5,171
  6,065
  6,998
  7,971
  8,985
  10,042
  11,145
  12,296
  13,498
  14,645
  15,957
  17,328
  18,762
  20,263
  21,835
  23,482
  25,208
  27,019
  28,918
  30,911
  33,004
  35,202
  37,510
  39,936
  42,485
  45,165
  47,982
  50,944
  54,059
Retained Cash Flow (-), $m
  563
  -875
  -927
  -965
  -1,003
  -1,043
  -1,084
  -1,126
  -1,170
  -1,217
  -1,265
  -1,316
  -1,370
  -1,426
  -1,486
  -1,548
  -1,615
  -1,684
  -1,758
  -1,836
  -1,918
  -2,005
  -2,096
  -2,192
  -2,293
  -2,400
  -2,513
  -2,631
  -2,756
  -2,887
  -3,025
Prev. year cash balance distribution, $m
 
  4,102
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,530
  4,244
  5,100
  5,995
  6,928
  7,901
  8,916
  9,975
  11,080
  12,233
  13,329
  14,587
  15,901
  17,276
  18,715
  20,220
  21,797
  23,450
  25,183
  27,000
  28,907
  30,908
  33,010
  35,217
  37,536
  39,972
  42,533
  45,226
  48,057
  51,034
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  7,219
  3,885
  4,439
  4,936
  5,370
  5,734
  6,024
  6,235
  6,365
  6,413
  6,330
  6,225
  6,046
  5,800
  5,494
  5,138
  4,743
  4,319
  3,877
  3,431
  2,990
  2,565
  2,163
  1,794
  1,460
  1,166
  913
  700
  525
  384
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Eli Lilly and Company is engaged in drug manufacturing business. The Company discovers, develops, manufactures and markets products in two segments: human pharmaceutical products and animal health products. The Company's human pharmaceutical business segment sells medicines, which are discovered or developed by its scientists. Its animal health business segment operates through the Company's Elanco division, which develops, manufactures and markets products for both food animals and companion animals. The Company's human pharmaceutical products include endocrinology products, neuroscience products, oncology products, immunology products and cardiovascular products. The Company's animal health products segment includes products for food animals and products for companion animals. As of December 31, 2016, the Company manufactured and distributed its products through facilities in the United States, Puerto Rico and 14 other countries.

FINANCIAL RATIOS  of  Eli Lilly (LLY)

Valuation Ratios
P/E Ratio 34.4
Price to Sales 4.4
Price to Book 6.7
Price to Tangible Book
Price to Cash Flow 19.4
Price to Free Cash Flow 25
Growth Rates
Sales Growth Rate 6.3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -32.8%
Cap. Spend. - 3 Yr. Gr. Rate -0%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 59.7%
Total Debt to Equity 73.6%
Interest Coverage 24
Management Effectiveness
Return On Assets 7.7%
Ret/ On Assets - 3 Yr. Avg. 7.2%
Return On Total Capital 11.7%
Ret/ On T. Cap. - 3 Yr. Avg. 10.8%
Return On Equity 19.2%
Return On Equity - 3 Yr. Avg. 16.6%
Asset Turnover 0.6
Profitability Ratios
Gross Margin 73.4%
Gross Margin - 3 Yr. Avg. 74.3%
EBITDA Margin 23.6%
EBITDA Margin - 3 Yr. Avg. 22.8%
Operating Margin 16.3%
Oper. Margin - 3 Yr. Avg. 14.2%
Pre-Tax Margin 15.9%
Pre-Tax Margin - 3 Yr. Avg. 15.1%
Net Profit Margin 12.9%
Net Profit Margin - 3 Yr. Avg. 12.4%
Effective Tax Rate 18.9%
Eff/ Tax Rate - 3 Yr. Avg. 17.6%
Payout Ratio 78.9%

LLY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LLY stock intrinsic value calculation we used $21222 million for the last fiscal year's total revenue generated by Eli Lilly. The default revenue input number comes from 2016 income statement of Eli Lilly. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LLY stock valuation model: a) initial revenue growth rate of 9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for LLY is calculated based on our internal credit rating of Eli Lilly, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Eli Lilly.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LLY stock the variable cost ratio is equal to 25.9%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $12575 million in the base year in the intrinsic value calculation for LLY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Eli Lilly.

Corporate tax rate of 27% is the nominal tax rate for Eli Lilly. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LLY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LLY are equal to 60.6%.

Life of production assets of 11.3 years is the average useful life of capital assets used in Eli Lilly operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LLY is equal to 0.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $14008 million for Eli Lilly - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1108.81 million for Eli Lilly is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Eli Lilly at the current share price and the inputted number of shares is $94.8 billion.

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COMPANY NEWS

▶ Mercks & Co.s Valuation in January 2018   [Jan-18-18 02:28PM  Market Realist]
▶ Is Eli Lilly and Company a Buy in 2018?   [07:34AM  Motley Fool]
▶ How This Biotech Stock Could Top Bigger Rivals In Preventing Migraines   [Jan-16-18 04:27PM  Investor's Business Daily]
▶ Big Pharma: Merck Zooms, Eli Lilly Lags   [10:37AM  Barrons.com]
▶ Three Diabetes Clinical Trials to Watch in 2018   [Jan-12-18 12:25PM  GuruFocus.com]
▶ Ignytas Drug Pipeline   [Jan-09-18 03:45PM  Market Realist]
▶ How Was Incytes Revenue Stream in 3Q17?   [11:55AM  Market Realist]
▶ Examining Incytes Quarterly Revenue Trend   [10:23AM  Market Realist]
▶ Despite Setbacks, Drugmakers Have Plans to Fight Alzheimers   [12:57AM  The Wall Street Journal]
▶ Drug Industry Isn't Giving Up on Alzheimer's   [Jan-08-18 07:27PM  The Wall Street Journal]
▶ A Look at Pfizers Valuation   [Jan-05-18 03:19PM  Market Realist]
▶ Analysts Recommendations for Eli Lilly in December 2017   [Jan-03-18 09:00AM  Market Realist]
▶ Analysts Estimates for Eli Lilly   [07:30AM  Market Realist]
▶ Lilly to Present at J.P. Morgan Healthcare Conference   [Jan-02-18 11:00AM  PR Newswire]
▶ Eli Lillys Elanco in 3Q17   [10:31AM  Market Realist]
▶ Eli Lillys Cardiovascular Products Portfolio in 3Q17   [Jan-01-18 10:33AM  Market Realist]
▶ Eli Lillys New Products Portfolio in 3Q17   [07:33AM  Market Realist]
▶ Eli Lillys Business Segments in 3Q17   [02:20PM  Market Realist]
▶ Eli Lillys Revenue Trend in 3Q17   [12:50PM  Market Realist]
▶ Eli Lillys Valuation in December 2017   [11:18AM  Market Realist]
▶ Lots to Pick from in Final Trades   [Dec-28-17 02:22PM  CNBC Videos]
▶ Whats AstraZenecas Valuation in December 2017?   [Dec-20-17 05:01PM  Market Realist]
▶ Eli Lilly: Updated Guidance Is a Shot in the Arm   [Dec-13-17 10:05AM  Barrons.com]
▶ What Analysts Recommend for Eli Lilly in December 2017   [Dec-12-17 10:30AM  Market Realist]
▶ How Is Olumiant Positioned after 3Q17?   [09:00AM  Market Realist]
▶ Eli Lilly raises dividend by 8%   [Dec-11-17 03:38PM  CNBC Videos]
▶ Eli Lilly hikes dividend by 8%   [03:36PM  MarketWatch]
▶ How Has Eli Lillys Cyramza Performed   [07:31AM  Market Realist]
▶ How Is Eli Lillys Taltz Positioned Now?   [10:31AM  Market Realist]
▶ How Eli Lillys Forteo and Jardiance Are Performing   [Dec-07-17 05:50PM  Market Realist]
Financial statements of LLY
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