Buffett Brain · Research note
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
LLY· Healthcare
Eli Lilly
Eli Lilly is a wonderful drug business priced for perfection at 39 times earnings.
Buffett fit
Strong fit
Owner
85
Durability
93
Management
56
Price
1
Score updated 26 Sept 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Lilly outright, I would be delighted with the operations and uneasy about the price I would have to pay to join now.
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This is about as durable as healthcare gets, and the durability score of 93 reflects that.
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Management earns a middling 56 from me, and the numbers explain why. Returns on capital are superb at 32.1%, yet only 43% of reported net income is showing up as , which means heavy reinvestment in plants and research.
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There is no here, and I want to be blunt about it. The owner-earnings yield is 0.86% and the ratio is 39.1, so you are paying roughly forty years of current profit and collecting less than one percent in up front.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Exceptional profitability with an 83.5% and a 45.9%
- 2 of 32.1% over the trailing year, with a strong 22.3% five-year average
- 3Revenue at 23.2% annually and earnings per share at 40.8%
- 4Deep durability, reflected in a 93 score and a worst earnings decline of just 11.3%
Concerns
6- 1Valuation is extreme: a 39.1 ratio and an owner-earnings yield of just 0.86% leave no room for error
- 2EV to of 36.3 confirms the whole enterprise is priced for flawless execution
- 3 is only 43% of net income, so reported earnings overstate the cash actually piling up
- 4 of 1.39 is more leverage than a conservative owner prefers
Price history
$1,271+421.3%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Lilly sells branded prescription medicines, and lately the GLP-1 franchise for diabetes and obesity has been the engine. The economics are extraordinary: an 83.5% and a 45.9% mean that once a molecule is discovered and approved, most of every additional dollar of sales drops toward profit. Revenue has compounded at 23.2% a year and earnings per share at 40.8%, which tells you demand has been outrunning the factory.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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