Eli Lilly (NYSE: LLY) beat analysts' earnings expectations every quarter last year and started this year out with another overshoot, bringing in an adjusted $1.24 per share compared with the $1.17 per share analysts were expecting.

The solid quarter came from a combination of increased foreign revenue and continued cost cutting. The adjusted earnings ignores the cost of its licensing deal with Boehringer Ingelheim for a piece of Boehringer's diabetes drugs and the $76 million in restructuring costs.

Can the company continue the trend through the patent cliff? Investors could only hope so.

After yesterday's beat, Lilly trades at a trailing P/E of 7.4. Astonishingly cheap, but that's because Lilly's earnings are expected to drop in 2012 after top-selling Zyprexa loses patent protection. While Zyprexa isn't as big of a drug as Lipitor, its loss is going to hurt Lilly more than Lipitor will hurt Pfizer (NYSE: PFE) because Zyprexa makes up such a large fraction -- 22%! -- of Lilly's revenue. Plus Lilly will lose Cymbalta and Humalog – No. 2 and 4 on Lilly's top sellers list -- in 2013.

Investors are valuing Lilly at 9.6 times 2012 projected earnings. Whether that's cheap depends on whether Lilly can exceed analysts' expectations next year and what the future beyond 2012 looks like. Lilly's pipeline -- both internally and externally derived drugs -- is critical.

So far the purchases haven't worked out so well. Amyvid, which it got from Avid Radiopharmaceuticals, failed to gain Food and Drug Administration approval last month and liprotamase from Alnara Pharmaceuticals got turned down last Friday.

One bright spot is that Lilly is close to gaining full approval of Amylin Pharmaceuticals (Nasdaq: AMLN) and Alkermes's (Nasdaq: ALKS) Bydureon in Europe. Of course, an approval in the U.S. -- more specifically the successful completion of a safety trial the FDA wants -- is still necessary before we pop open the bubbly.

Whether Lilly is a value or a value trap at this point depends on a lot of unknown factors. There's a nice 5.4% dividend yield if you're willing to invest blindly, but cautious investors would be better off watching the landing as it falls off the patent cliff before investing.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Motley Fool has a disclosure policy.