Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Eli Lilly and Company's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 25.3% to 8.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 111, DPO 130, DIO 307). At a 7.6% WACC with mid-year discounting, the terminal value (87% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 14.9x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $731.63 per share, suggesting LLY is overvalued by 18.9% at the current price of $902.33.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 27,508 | 31,936 | 35,821 | 39,455 | 42,628 | 43,694 |
| (−) Net Interest | 1,101 | 1,278 | 1,434 | 1,579 | 1,706 | 1,749 |
| (+) D&A | 5,720 | 7,605 | 9,656 | 11,147 | 12,737 | 13,056 |
| EBITDA | 34,329 | 40,819 | 46,910 | 52,181 | 57,072 | 58,499 |
| (−) Tax | 4,065 | 4,720 | 5,294 | 5,831 | 6,300 | — |
| (−) CapEx | 11,403 | 13,238 | 14,849 | 16,355 | 17,671 | — |
| (−) ΔWC | 4,618 | 5,334 | 4,681 | 4,377 | 3,823 | — |
| Free Cash Flow (FCF) | 14,243 | 17,526 | 22,087 | 25,617 | 29,277 | — |
| Peers' EBITDA Multiple | 14.9x | |||||
| Terminal Value | 871,046 | |||||
| WACC / Discount Rate | 7.60% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 13,730 | 15,702 | 18,389 | 19,821 | 21,052 | 603,798 |
| Enterprise Value | 692,492 | |||||
| Projection Period | 88,694 | 12.8% | ||||
| Terminal Value | 603,798 | 87.2% | ||||
| (−) Current Net Debt | 35,340 | |||||
| Equity Value | 657,152 | |||||
| (÷) Outstanding Shares | 898M | |||||
| Fair Price | $732 | -18.9% | ||||
| WACC \ EV/EBITDA Exit Multiple | 10.9x | 12.9x | 14.9x | 16.9x | 18.9x |
|---|---|---|---|---|---|
| 5.6% | $605 | $704 | $803 | $902 | $1001 |
| 6.6% | $577 | $672 | $766 | $861 | $956 |
| 7.6% | $551 | $641 | $732 | $822 | $912 |
| 8.6% | $526 | $613 | $699 | $785 | $871 |
| 9.6% | $503 | $585 | $668 | $750 | $832 |
Current price: $902.33. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.