Eli Lilly & Company (LLY) recently concluded a trading session at $786.92, marking a 1.19% increase from the previous day's closing price. This performance surpassed that of the broader market, with the S&P 500 posting a 0.61% gain. The Dow Jones Industrial Average also saw positive movement, rising by 0.49%, while the Nasdaq Composite, heavily weighted with technology stocks, advanced by 0.95%.
However, looking at the past month, Eli Lilly's shares have experienced a decline of 3.66%. This contrasts with the Medical sector's loss of 0.67% and the S&P 500's gain of 3.85% over the same period.
Upcoming Earnings Report and Expectations
The financial community is eagerly awaiting Eli Lilly's upcoming earnings report, scheduled for release on August 7, 2025. Analysts anticipate an earnings per share (EPS) of $5.56, which would represent a substantial 41.84% increase compared to the same quarter of the previous year. Revenue estimates are also optimistic, with the consensus projecting $14.47 billion, reflecting a 28.02% increase year-over-year.
For the entire fiscal year, projections are for an EPS of $21.94 and revenue of $59.92 billion. These figures represent significant growth compared to the previous year, with anticipated increases of 68.9% and 33.03% for EPS and revenue, respectively.
Analyst Estimate Revisions and Their Significance
Investors often pay close attention to revisions in analyst estimates for a company. These adjustments can provide valuable insights into the evolving dynamics of a business and its near-term prospects. Positive revisions generally signal that analysts are becoming more confident in the company's performance and its potential for profitability. These estimate revisions are closely correlated with short-term stock price performance.
Zacks Rank: A Tool for Evaluating Stock Potential
The Zacks Rank system is a proprietary tool used to evaluate the investment potential of stocks. It assigns a rank from #1 (Strong Buy) to #5 (Strong Sell) based on factors like earnings estimate revisions. The system has a strong historical track record, with #1 ranked stocks averaging an annual return of +25% since 1988, based on external audits. Currently, Eli Lilly holds a Zacks Rank of #4 (Sell). Within the last month, the consensus EPS projection has decreased by 0.06%.
Valuation Metrics: P/E Ratio and PEG Ratio
When assessing a stock's valuation, investors often consider metrics such as the Price-to-Earnings (P/E) ratio and the Price/Earnings to Growth (PEG) ratio. Eli Lilly's current Forward P/E ratio stands at 35.45, which indicates a premium compared to the industry average of 13.73.
The PEG ratio, which incorporates a company's expected earnings growth rate, provides a more comprehensive valuation assessment. Eli Lilly's PEG ratio is currently 1.14, slightly below the industry average of 1.24.
Industry Context: Large Cap Pharmaceuticals
Eli Lilly operates within the Large Cap Pharmaceuticals industry, which is part of the broader Medical sector. This industry currently holds a Zacks Industry Rank of 54, placing it in the top 22% of over 250 industries. The Zacks Industry Rank is determined by averaging the Zacks Ranks of the individual stocks within the industry group. Historically, the top 50% of industries have outperformed the bottom half by a significant margin, approximately 2 to 1.
Key Takeaways for Investors
- Earnings Expectations: Analysts predict strong earnings growth for Eli Lilly in the upcoming quarter and fiscal year.
- Analyst Sentiment: Monitor revisions to analyst estimates as they can provide insights into the company's near-term prospects.
- Zacks Rank: Be aware of Eli Lilly's current Zacks Rank, as it reflects the system's assessment of the stock's potential.
- Valuation: Consider the P/E and PEG ratios in relation to industry averages when evaluating the stock's valuation.
- Industry Rank: The Large Cap Pharmaceuticals industry is currently ranked relatively high, suggesting a favorable environment for companies in this sector.
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