Eli Lilly & Co. (NYSE:LLY)

Market (fair) value of Lilly

The market value demonstrates a strong and consistent upward trend over the five-year period. Starting at approximately $215.6 billion in 2020, it increased moderately to around $244.0 billion in 2021. The growth accelerated significantly in subsequent years, reaching about $325.6 billion in 2022, before more than doubling to roughly $731.7 billion in 2023, and culminating at approximately $852.5 billion by the end of 2024.

Invested capital

Invested capital exhibits a more moderate and less consistent pattern. Beginning at $24.6 billion in 2020, it rose slightly to $26.1 billion in 2021, followed by a decrease to $24.3 billion in 2022. From 2022 onwards, there is a steady increase, first to $29.4 billion in 2023, and then to $35.8 billion in 2024, indicating renewed investment activity in the later years.

Market value added (MVA)

MVA reflects a similar trajectory to the market value, indicating a widening gap between market value and invested capital. Starting from $191.1 billion in 2020, it increased moderately to $217.8 billion in 2021. The growth intensified in 2022, reaching $301.3 billion, followed by a substantial rise to $702.3 billion in 2023, and further to $816.7 billion in 2024, demonstrating a significant value creation relative to invested capital.

Summary of trends and insights

Overall, the market value and MVA show robust growth, particularly from 2022 onward, reflecting increased investor confidence, company valuation, or market conditions favoring the company’s prospects. The invested capital, while increasing, does so at a much slower pace and even declines slightly in 2022, suggesting capital management strategies that may have shifted focus before ramping up investment again in later years. The rapid escalation in market value and MVA relative to invested capital implies enhanced efficiency or market perception of growth potential that exceeds the rate of capital investment. This pattern may signal successful operational performance or strong market positioning during the period analyzed.

The financial data reveals significant trends in market value added (MVA), invested capital, and the MVA spread ratio over the five-year period from 2020 to 2024.

Market Value Added (MVA)

MVA shows a consistent and substantial increase each year. Starting at approximately $191 billion in 2020, it rises to about $218 billion in 2021, then to $301 billion in 2022. A marked acceleration occurs in 2023, with MVA more than doubling to $702 billion, followed by a further increase to $817 billion in 2024. This upward trajectory indicates a strong enhancement in the company’s market valuation relative to the capital invested.

Invested Capital

Invested capital experiences moderate fluctuations over the observed period. It begins at roughly $24.6 billion in 2020, climbs slightly to $26.1 billion in 2021, then dips to $24.3 billion in 2022. From 2022 forward, invested capital shows steady growth, increasing to $29.4 billion in 2023 and reaching $35.8 billion in 2024. The overall trend exhibits cautious expansion of invested resources, particularly after 2022.

MVA Spread Ratio

The MVA spread ratio, representing the ratio of MVA to invested capital in percentage terms, exhibits a pronounced upward trend. Starting at 778.02% in 2020, it steadily increases to 833.4% in 2021 and then surges to 1239.79% in 2022. The most significant jump is observed between 2022 and 2023, where the ratio more than doubles to 2390.18%, before slightly declining to 2281.36% in 2024. This pattern reflects a growing efficiency and value creation relative to the capital invested, with peak performance in 2023 followed by a mild decrease while remaining exceptionally high.

Overall, the data illustrates a robust enhancement in value creation with rising market valuation that outpaces the increment in invested capital. The company appears to be achieving higher returns on invested resources, particularly notable in the sharp increases in MVA and MVA spread ratio from 2022 to 2023. The slight decline in the spread ratio in the final year suggests a potential moderation in value generation efficiency, though it remains substantially strong.

Market Value Added (MVA)

The market value added demonstrates a significant upward trend over the analyzed period. Starting at approximately 191 billion US dollars at the end of 2020, it increased steadily each year, reaching around 817 billion US dollars by the end of 2024. The increase was particularly pronounced between 2022 and 2023, where it more than doubled, indicating substantial growth in market valuation.

Revenue

Revenue also exhibited consistent growth across the years. From about 24.5 billion US dollars in 2020, revenue climbed steadily to reach approximately 45 billion US dollars by the end of 2024. The increment accelerated notably after 2022, indicating stronger sales performance or pricing power during the latter years.

MVA Margin

The MVA margin, expressed as a percentage, showed high variability but an overall rising pattern. Initially, it maintained values close to 770% during 2020 and 2021, then jumped sharply to over 1000% in 2022. The margin peaked in 2023 at around 2058%, followed by a slight decrease in 2024 to 1813%. Despite this late dip, the margin remains significantly higher than in the earlier years, suggesting an enhancement in value creation relative to revenue.

Summary of Trends

The data indicates strong overall growth in both market valuation and revenue throughout the period, with the company markedly increasing its market value added. The sharp rise in MVA margin after 2021 reflects improved efficiency or market perceptions relative to revenue, potentially linked to strategic or operational factors that enhanced shareholder value. The stabilization of the MVA margin after the peak in 2023 suggests maturation or market adjustment following rapid expansion.