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What Should Investors Know About Eli Lilly and Company's (NYSE:LLY) Growth?

Simply Wall St

Looking at Eli Lilly and Company's (NYSE:LLY) earnings update on 30 June 2019, it seems that analyst forecasts are substantially optimistic, with profits predicted to ramp up by an impressive 62% next year, compared with the previous 5-year average growth rate of -6.9%. Presently, with latest-twelve-month earnings at US$3.2b, we should see this growing to US$5.2b by 2020. Below is a brief commentary around Eli Lilly's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Eli Lilly

How will Eli Lilly perform in the near future?

The 11 analysts covering LLY view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of LLY's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:LLY Past and Future Earnings, August 1st 2019

From the current net income level of US$3.2b and the final forecast of US$4.5b by 2022, the annual rate of growth for LLY’s earnings is 1.9%. This leads to an EPS of $7.93 in the final year of projections relative to the current EPS of $3.14. This initial high-growth revenue squeezes LLY's margins. However, analysts are expecting earnings growth to catch up, and current margins of 13% to expand to 18% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Eli Lilly, I've put together three essential aspects you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Eli Lilly worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Eli Lilly is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Eli Lilly? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.