Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drugmaker Eli Lilly (NYSE: LLY ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Lilly's business and see what CAPS investors are saying about the stock right now.
Lilly facts
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Headquarters (Founded)
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Indianapolis (1876)
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Market Cap
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$41.1 billion
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Industry
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Pharmaceuticals
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Trailing-12-Month Revenue
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$22.7 billion
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Management
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Chairman/CEO John Lechleiter
CFO Derica Rice
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Return on Capital (Average, Past 3 Years)
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21.3%
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Cash/Debt
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$4.76 billion / $6.68 billion (3/31/10)
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Dividend Yield
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5.4%
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Competitors
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Pfizer (NYSE: PFE )
AstraZeneca (NYSE: AZN )
Novo Nordisk
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 93% of the 1,128 members who have rated Lilly believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars mrindependent and healthcarevalue, both of whom are ranked in the top 5% of our community.
A few months ago, mrindependent wrote that: "The balance sheet is conservative and the pipeline is good enough to generate some sort of revenue growth in 2010. Now that health care reform is on the backburner, I hope for a small bounce in the share price."
But while Lilly has, indeed, posted some impressive results of late, it's the company's near-term future that has some investors worried. The problem? A patent cliff so steep that, as my fellow Fool Brian Orelli recently described, "makes the Grand Canyon look like a creek bed" and "so back-ended, it causes Sir Mix-a-Lot to salivate." Now those are my kind of metaphors!
Of course, with Lilly trading at a substantial P/E discount to all of its megacap rivals Pfizer, AstraZeneca, and Novo Nordisk, CAPS All-Stars like healthcarevalue can't help but wonder if those fears are already baked into the price:
Very low price/earnings valuation as compared to others within industry, of close to ~ 9. Market cap leaves a bit of room to grow, but also shows established presence. Concern over drug pipeline is dwarfed by potential to find and cultivate new drugs, particularly in niche markets such as Alzheimer's. Took a look at valuation statistics and numbers including return on assets, return on equity, profit margin, operating margin, and debt/equity all look promising.
What do you think about Lilly, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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