With shares of Eli Lilly (LLY 0.55%) temporarily jumping more than 10% on Aug. 8 following its earnings report for the second quarter, it's easy to conclude that the company's spate of good performance is destined to continue forever.

But is there evidence to actually support that assertion, or is it a mirage masking an investment that's sure to burn investors who buy in right now? There's at least one argument in favor of each of those perspectives.

Supply concerns are abating just as demand might increase again

One reason it's not too late to buy this stock is that Eli Lilly is making more money than it expected to at the start of the year. Management raised revenue guidance to a ceiling of $46.6 billion, or a huge 38% anticipated growth from last year's levels. Plus, it raised its minimum earnings per share (EPS) guidance by a solid 15%, to $15.10.

Driving this increase were its diabetes and weight-loss drugs, Mounjaro and Zepbound, respectively. With both drugs in intense demand, Lilly has allocated another $5.3 billion in Q2 with the goal of increasing manufacturing capacity for those two medicines which, according to management, should be able to mostly serve existing demand.

That's important, as the company plans on getting permission from regulators to market the drugs for additional conditions, like for heart failure in patients with obesity. If that happens -- and based on the clinical data so far, it probably will -- the addressable market will increase even more, which is another argument for why it's not too late to invest.

Furthermore, for the first half of 2024, Lilly's top line grew by 31% year over year, reaching more than $20 billion. Even if its growth rate doesn't accelerate much more, it could certainly stand to decelerate by quite a bit before the numbers would warrant concern about its stock losing steam.

Lateness isn't the only concern

Despite Lilly's impressive results recently, it's had a couple of issues supporting the argument that it's too late to buy the stock.

The primary one is its valuation. At this writing, the price-to-earnings (P/E) multiple is around 114. In other words, to pay shareholders back for the price of buying all the outstanding shares of the stock today, the company would need to deliver them 100% of its current earnings for 114 years, assuming the earnings didn't keep growing in the meantime.

This paradigm isn't something to interpret literally. The point is that based on the stock's current valuation, there's an implied expectation that Eli Lilly will continue growing net income rapidly for quite some time. There's thus a higher-than-average risk that sometime in the future, the rate of expansion will falter, thereby suddenly letting a lot of air out of Lilly's share price.

In this view, the investors who buy the stock at its current valuation are "too late": They're paying top dollar to take on a risk that earlier investors weren't exposed to because they have a lower cost basis. On this point, the stock's detractors are correct.

But there's no rule that says Lilly's earnings can't keep rising faster than current expectations. Nor is there a rule that says its valuation can't get even higher than it is now. So pairing these two tidbits with its impressive set of opportunities, the best course of action is to buy its shares if you can stomach its current valuation. In that sense, it simply isn't in the ballpark of being too late yet.