Did You Participate In Any Of Eli Lilly's (NYSE:LLY) Fantastic 196% Return ?
When you buy a stock there is always a possibility that it could drop 100%. But on the bright side, you can make far more than 100% on a really good stock. One great example is Eli Lilly and Company (NYSE:LLY) which saw its share price drive 163% higher over five years. Also pleasing for shareholders was the 11% gain in the last three months. But this could be related to the strong market, which is up 6.5% in the last three months.
See our latest analysis for Eli Lilly
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
During the five years of share price growth, Eli Lilly moved from a loss to profitability. That kind of transition can be an inflection point that justifies a strong share price gain, just as we have seen here.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that Eli Lilly has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Eli Lilly stock, you should check out this FREE detailed report on its balance sheet.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. In the case of Eli Lilly, it has a TSR of 196% for the last 5 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!
A Different Perspective
Eli Lilly provided a TSR of 59% over the last twelve months. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 24% per year over five year. This suggests the company might be improving over time. It's always interesting to track share price performance over the longer term. But to understand Eli Lilly better, we need to consider many other factors. To that end, you should be aware of the 1 warning sign we've spotted with Eli Lilly .
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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