Eli Lilly & Co. (NYSE:LLY)

The valuation ratios exhibited significant fluctuations throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Generally, the ratios increased from the beginning of the period through late 2023 before declining into 2025. This suggests a period of increasing investor optimism followed by a potential recalibration of expectations.

Price to Earnings (P/E)

The Price to Earnings ratio demonstrated a consistent upward trend from 45.29 in March 2022 to a peak of 135.24 in December 2022. This indicates increasing investor willingness to pay for each dollar of earnings. Subsequently, the ratio decreased substantially, falling to 47.45 by December 2025. This decline could be attributed to factors such as profit taking, increased earnings, or a shift in market sentiment.

Price to Operating Profit (P/OP)

Similar to the P/E ratio, the Price to Operating Profit ratio generally increased from 36.49 in March 2022 to 109.75 in December 2022. The pattern of increase was less pronounced than that of the P/E ratio. Following the peak, this ratio also experienced a decline, reaching 37.24 in December 2025. The correlation between the P/E and P/OP trends suggests a consistent valuation pattern related to profitability.

Price to Sales (P/S)

The Price to Sales ratio showed a steady increase from 9.47 in March 2022 to 20.77 in December 2022. This suggests investors were placing a higher value on each dollar of revenue generated. The ratio then decreased, ending at 15.03 in December 2025. The decrease, while substantial, was less dramatic than the declines observed in the earnings-based ratios, potentially indicating continued revenue growth despite changing market conditions.

Price to Book Value (P/BV)

The Price to Book Value ratio increased from 29.75 in March 2022 to a high of 65.80 in December 2022, indicating a growing premium placed on the company’s net asset value. The ratio then decreased, ending at 36.91 in December 2025. This decline suggests a reduction in the market’s assessment of the company’s underlying asset value relative to its market price.

Overall, the observed trends suggest a period of heightened valuation followed by a correction. The consistent pattern of increasing ratios through December 2022 and subsequent declines across all metrics warrants further investigation into the underlying drivers of these changes, including company performance, industry trends, and broader macroeconomic factors.

The price-to-earnings (P/E) ratio exhibited considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrated an increasing trend, peaking in September 2023, before experiencing a substantial decline and subsequent stabilization.

Initial Increase (Mar 31, 2022 – Sep 30, 2023)

From a value of 45.29 in March 2022, the P/E ratio generally increased, reaching a high of 110.43 by September 2023. This increase suggests a growing investor confidence in the company’s earnings potential relative to its share price, or potentially, an overvaluation of the stock. The rate of increase accelerated in the latter half of 2022 and continued into 2023.

Significant Decline (Dec 31, 2023 – Jun 30, 2025)

Following the peak in September 2023, the P/E ratio experienced a marked decrease, falling to 43.95 by June 2025. This decline coincided with a period of increasing earnings per share (EPS), indicating that earnings growth did not keep pace with the prior share price appreciation, or that the share price corrected downwards. The most substantial drop occurred between December 2023 and June 2025.

Recent Stabilization (Sep 30, 2025 – Dec 31, 2025)

The P/E ratio showed signs of stabilization in the final two quarters of the period, increasing from 43.36 in September 2025 to 47.45 in December 2025. This suggests a potential bottoming out of the decline, although further observation is needed to confirm a sustained trend.

Relationship to Earnings Per Share

The fluctuations in the P/E ratio are closely linked to changes in earnings per share. While the share price generally increased throughout much of the period, the rate of increase in the share price often outpaced the growth in EPS, contributing to the initial rise in the P/E ratio. Conversely, the subsequent decline in the P/E ratio was driven by a combination of share price decreases and accelerating EPS growth.

Overall, the observed P/E ratio demonstrates a dynamic relationship between share price and earnings. The period was characterized by initial expansion, followed by a significant contraction, and a potential stabilization towards the end of the observation window.

The Price to Operating Profit (P/OP) ratio exhibited considerable fluctuation over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrated an increasing trend, peaking in September 2023, before undergoing a substantial decline and stabilizing towards the end of the period.

Initial Phase (Mar 31, 2022 – Sep 30, 2022)

The P/OP ratio increased from 36.49 to 46.48. This rise coincided with an increase in share price from US$292.13 to US$352.58, while operating profit per share experienced a slight decrease from US$8.01 to US$7.59. The increase in the ratio suggests that the market was willing to pay a higher premium for each dollar of operating profit during this period.

Ascending Trend & Peak (Dec 31, 2022 – Sep 30, 2023)

A significant upward trend continued, with the P/OP ratio reaching its highest point at 93.27 in September 2023. This was driven by a substantial increase in share price, moving from US$329.07 to US$580.29, while operating profit per share decreased from US$6.80 to US$6.22. This indicates a considerable expansion in market valuation relative to operating profitability.

Decline & Stabilization (Dec 31, 2023 – Dec 31, 2025)

Following the peak, the P/OP ratio experienced a marked decline, falling to 37.24 by December 31, 2025. This decrease was primarily attributable to a substantial increase in operating profit per share, rising from US$6.80 to US$27.88, coupled with a more moderate increase in share price, from US$745.91 to US$1,038.27. The ratio’s decline suggests that the market’s valuation premium decreased as profitability improved. The ratio stabilized in the final quarter, indicating a potential equilibrium between price and operating performance.

Volatility

The P/OP ratio demonstrated significant volatility throughout the period. The largest single-quarter increase occurred between June 30, 2023, and September 30, 2023 (from 69.42 to 93.27), while the largest single-quarter decrease occurred between December 31, 2023, and March 31, 2024 (from 109.75 to 99.34). This volatility suggests sensitivity to market conditions and investor sentiment.

In summary, the P/OP ratio initially rose with share price increases, then peaked as share price continued to climb despite declining operating profit per share. Subsequently, the ratio decreased as operating profit per share experienced substantial growth, suggesting a recalibration of market valuation relative to underlying earnings. The ratio ultimately stabilized, indicating a potential new valuation range.

The price-to-sales ratio exhibited a generally increasing trend over the observed period, punctuated by periods of fluctuation. Initially, the ratio rose from 9.47 in March 2022 to a peak of 11.46 in September 2022, before declining slightly to 10.96 by the end of that year. A significant upward trajectory commenced in the first half of 2023, with the ratio more than doubling from 13.38 in March to 16.78 in June, and continuing to 17.18 in September. This growth accelerated further into 2024, peaking at 20.77 in December 2023, before stabilizing around the 20.64-20.66 range in the first quarter of 2024.

A noticeable shift occurred in the latter half of 2024, with the ratio beginning a downward trend. This decline continued into 2025, reaching a low of 11.39 in June. A subsequent increase was observed in the third quarter of 2025, bringing the ratio to 13.44, followed by a further increase to 15.03 by December 2025.

Overall Trend

The price-to-sales ratio demonstrated a strong overall increase from March 2022 to December 2023, indicating investors were willing to pay a progressively higher premium for each dollar of sales. The subsequent decline in 2024 and early 2025 suggests a potential recalibration of market expectations or a change in investor sentiment. The final increase in the last quarter of the observed period indicates a possible renewed positive outlook.

Sales per Share Trend

Sales per share generally increased throughout the period, rising from 30.86 in March 2022 to 69.09 in December 2025. This consistent growth in sales per share likely contributed to the initial increase in the price-to-sales ratio. However, the ratio’s decline in late 2024 and early 2025, despite continued sales per share growth, suggests that share price appreciation did not keep pace with sales increases during that time.

Fluctuations and Potential Drivers

The fluctuations in the price-to-sales ratio may be attributable to a variety of factors, including broader market conditions, investor confidence in the company’s future growth prospects, and specific company announcements or events. The substantial increase in the ratio during 2023 could be linked to positive developments regarding the company’s product pipeline or clinical trial results. The subsequent decline may reflect profit-taking or concerns about future growth sustainability.

In summary, the price-to-sales ratio experienced significant volatility over the analyzed timeframe, demonstrating a clear upward trend initially, followed by a period of decline and a recent resurgence. The interplay between share price and sales per share appears to be a key driver of these fluctuations.

The price-to-book value (P/BV) ratio for the analyzed period demonstrates considerable fluctuation. Initially, the ratio exhibited an increasing trend from March 31, 2022, to June 30, 2023, followed by a period of volatility and then a general increase through December 31, 2025. This suggests a changing perception of the market value relative to the net asset value of the company over time.

Initial Trend (Mar 31, 2022 – Jun 30, 2023)

From March 31, 2022, to June 30, 2023, the P/BV ratio increased from 29.75 to 44.75. This indicates that the market was willing to pay a progressively higher premium for each dollar of book value. The increase suggests growing investor confidence or expectations regarding the company’s future earnings potential relative to its net asset value.

Volatility and Subsequent Increase (Sep 30, 2023 – Dec 31, 2025)

Following June 30, 2023, the P/BV ratio experienced significant volatility. It peaked at 65.80 in December 2023, then decreased to 33.19 by June 2025, before rising again to 36.91 by December 2025. This period reflects a more uncertain market sentiment, potentially influenced by company-specific news, broader economic conditions, or sector-wide trends. The final increase suggests a renewed positive outlook towards the end of the analyzed period.

Book Value Per Share (BVPS) Trend

The book value per share generally increased throughout the period, moving from $9.82 in March 2022 to $28.13 in December 2025. This upward trend in BVPS likely contributed to the overall increases observed in the P/BV ratio, as a higher book value provides a stronger base for valuation. However, the P/BV ratio’s fluctuations were more pronounced than those of BVPS, indicating that market sentiment played a significant role in the valuation.

The highest P/BV ratio of 65.80 was recorded in December 2023, while the lowest was 29.75 in March 2022. The substantial range in the P/BV ratio suggests that the company’s valuation is sensitive to market conditions and investor expectations. The observed trends warrant further investigation into the underlying factors driving these changes, such as earnings announcements, industry developments, and macroeconomic indicators.