Microsoft Excel LibreOffice Calc

Eli Lilly & Co. (LLY)


Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Eli Lilly & Co., FCFF calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income (loss) 3,232,000  (204,100) 2,737,600  2,408,400  2,390,500 
Net noncash charges 4,671,200  2,614,800  2,597,500  1,282,400  2,015,500 
Other changes in operating assets and liabilities, net of acquisitions and divestitures (2,378,700) 3,204,900  (484,100) (918,000) (38,900)
Net cash provided by operating activities 5,524,500  5,615,600  4,851,000  2,772,800  4,367,100 
Cash payments for interest on borrowings, net of tax1 200,905  149,940  118,789  111,871  111,871 
Interest costs capitalized, net of tax2 —  —  —  —  — 
Purchases of property and equipment (1,210,600) (1,076,800) (1,037,000) (1,066,200) (1,162,600)
Proceeds from disposals of property and equipment 3,600  40,700  73,400  92,600  15,300 
Free cash flow to the firm (FCFF) 4,518,405  4,729,440  4,006,189  1,911,071  3,331,671 

Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19).

Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Eli Lilly & Co.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Eli Lilly & Co.’s FCFF increased from 2016 to 2017 but then slightly declined from 2017 to 2018.

Interest Paid, Net of Tax

Eli Lilly & Co., interest paid, net of tax calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Effective Income Tax Rate (EITR)
EITR1 10.23% 22.19% 18.86% 13.68% 20.32%
Interest Paid, Net of Tax
Cash payments for interest on borrowings, before tax 223,800  192,700  146,400  129,600  140,400 
Less: Cash payments for interest on borrowings, tax2 22,895  42,760  27,611  17,729  28,529 
Cash payments for interest on borrowings, net of tax 200,905  149,940  118,789  111,871  111,871 
Interest Costs Capitalized, Net of Tax
Interest costs capitalized, before tax —  —  —  —  — 
Less: Interest costs capitalized, tax3 —  —  —  —  — 
Interest costs capitalized, net of tax —  —  —  —  — 

Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19).

2018 Calculations

2 Cash payments for interest on borrowings, tax = Cash payments for interest on borrowings × EITR
= 223,800 × 10.23% = 22,895

3 Interest costs capitalized, tax = Interest costs capitalized × EITR
= 0 × 10.23% = 0


Enterprise Value to FCFF Ratio, Current

Eli Lilly & Co., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in thousands)
Enterprise value (EV) 113,857,209 
Free cash flow to the firm (FCFF) 4,518,405 
Ratio
EV/FCFF 25.20
Benchmarks
EV/FCFF, Competitors
Abbott Laboratories 28.70
AbbVie Inc. 9.34
Allergan PLC 12.33
Amgen Inc. 9.82
Biogen Inc. 8.61
Bristol-Myers Squibb Co. 13.95
Celgene Corp. 14.67
Gilead Sciences Inc. 9.99
Johnson & Johnson 19.97
Merck & Co. Inc. 26.05
Pfizer Inc. 17.65
Regeneron Pharmaceuticals Inc. 17.10
EV/FCFF, Sector
Pharmaceuticals & Biotechnology 16.07
EV/FCFF, Industry
Health Care 18.10

Based on: 10-K (filing date: 2019-02-19).

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

Eli Lilly & Co., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Enterprise value (EV)1 132,220,569  90,652,292  93,004,803  83,859,148  82,266,012 
Free cash flow to the firm (FCFF)2 4,518,405  4,729,440  4,006,189  1,911,071  3,331,671 
Ratio
EV/FCFF3 29.26 19.17 23.22 43.88 24.69
Benchmarks
EV/FCFF, Competitors
Abbott Laboratories 26.46 23.86 36.35 30.00 27.54
AbbVie Inc. 10.51 20.93 17.64 14.93 32.10
Allergan PLC 11.11 14.68 69.00 36.43 39.81
Amgen Inc. 10.31 10.37 11.32 11.85 13.77
Biogen Inc. 12.05 26.28 14.61 20.11 34.00
Bristol-Myers Squibb Co. 15.74 24.15 51.76 87.88 35.51
Celgene Corp. 14.27 13.72 23.00 35.79 34.75
Gilead Sciences Inc. 9.80 9.38 6.44 6.51 12.63
Johnson & Johnson 19.27 19.67 19.65 16.62 17.44
Merck & Co. Inc. 25.27 31.98 20.51 13.16 24.11
Pfizer Inc. 17.76 15.13 14.94 14.19 12.81
Regeneron Pharmaceuticals Inc. 23.09 32.47 38.99 57.44 97.24
EV/FCFF, Sector
Pharmaceuticals & Biotechnology 16.40 18.02 17.51 16.60 20.04
EV/FCFF, Industry
Health Care 18.26 19.22 18.59 17.46 19.65

Based on: 10-K (filing date: 2019-02-19), 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19).

2018 Calculations

3 EV/FCFF = EV ÷ FCFF
= 132,220,569 ÷ 4,518,405 = 29.26

Ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Eli Lilly & Co.’s EV/FCFF ratio declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.