ValuratorExplore Company Valuations

Price-to-Sales (P/S)

For informational and educational purposes only • Not investment advice.

Eli Lilly

Pharmaceuticals

Estimated Fair Value

$641.42

Stock price: $1179.27

Fair value below stock price

This model estimates a company's fair value by applying its historical Price-to-Sales multiple to revenue.

Historical P/S Ratios

This chart shows the company's historical Price-to-Sales ratio by year.

2016: 3.3x P/S3.3x20162017: 4.1x P/S4.1x20172018: 5.2x P/S5.2x20182019: 5.2x P/S5.2x20192020: 6.2x P/S6.2x20202021: 8.9x P/S8.9x20212022: 11.8x P/S11.8x20222023: 15.9x P/S15.9x20232024: 16.1x P/S16.1x20242025: 15.5x P/S15.5x2025

Key Valuation Metrics

Selected P/S Multiple

Notes

• The current Price-to-Sales (P/S) ratio is meaningfully above the company's historical P/S multiple, indicating the stock is trading at a higher valuation relative to its historical revenue.
• The historical Price-to-Sales range is wide, meaning the valuation is sensitive to which historical multiple is used.

What is Price-to-Sales (P/S) Valuation?

Price-to-Sales (P/S) Valuation estimates a company's Fair Value based on its Revenue and the P/S multiple applied to that Revenue.

The P/S ratio compares a company's Market Capitalization with its Revenue. It shows how much investors are willing to pay for each unit of Revenue generated by the company.

Historical P/S ratios show the valuation multiples at which the company has traded in the past. They can be used as a reference for estimating Fair Value from the company's Revenue.

P/S Valuation can be useful for companies with negative or volatile earnings, but it does not directly account for profitability, margins or operating efficiency.

How the P/S Model Works

The Price-to-Sales model estimates fair value by calculating the company's historical P/S multiples, selecting a valuation P/S, and applying it to current Revenue to estimate Fair Value per Share.

Historical Revenue & Share Prices
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Calculate Historical P/S
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Select Valuation P/S
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Apply to Current Revenue
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Fair Value per Share

P/S Formula

P/S Ratio=Market CapitalizationRevenue \text{P/S Ratio} = \frac{ \text{Market Capitalization} }{ \text{Revenue} }

Key Model Assumptions

• The company must have positive current Revenue.
• Current Revenue is based on trailing twelve-month (TTM) results when four consecutive quarterly periods are available; otherwise, the latest annual revenue is used.
• Historical P/S ratios are calculated only for years with valid positive Revenue and market data.
• The 10 most recent valid historical P/S ratios are used to estimate the company's typical valuation multiple.
• The historical median P/S forms the Base valuation assumption.
• Conservative and optimistic scenarios adjust the historical median P/S.
• Historical P/S multiples may not remain representative if the company's growth, margins or profitability change materially.

Step 1 — Calculate Historical P/S Ratios

Historical Market Cap = Year-End Share Price × Historical Shares Outstanding
Historical P/S = Historical Market Cap / Historical Revenue
Historical Median P/S = Median of the 10 most recent valid historical P/S ratios
Historical Median P/S = 7.58x

The model calculates historical Market Capitalization and historical P/S ratios. The median of the 10 most recent valid P/S ratios is then used as Eli Lilly's historical valuation benchmark. The resulting median P/S is 7.58x.

Step 2 — Select the Valuation Multiple

Selected P/S = Historical Median P/S × Scenario Adjustment (Base)
Selected P/S = 7.58x × 100% = 7.58x

The selected scenario adjusts the historical median P/S to determine the valuation multiple used to estimate Fair Value. Under the base scenario, the model uses a P/S multiple of 7.58x.

Step 3 — Estimate Fair Value per Share

Fair Market Cap = Revenue × Selected P/S
Fair Market Cap = $79.7B × 7.58x = $604.0B
Fair Value per Share = Fair Market Cap / Shares Outstanding
Fair Value per Share = $604.0B / 0.94B = $641.42

The selected P/S multiple is applied to Eli Lilly's Revenue of $79.7B to estimate a Fair Market Capitalization of $604.0B. Dividing this value by Shares Outstanding produces an estimated Fair Value per Share of $641.42.

Step 4 — Compare With the Current Market Valuation

Current P/S = Current Market Cap / Current Revenue
Current P/S = $1110.6B / $79.7B = 13.94x
Valuation Gap = Fair Value per Share / Current Price − 1
Valuation Gap = $641.42 / $1179.27 − 1 = -45.6%

Current P/S shows the multiple currently assigned to Eli Lilly's Revenue. The stock currently trades at 13.94x compared with a historical median of 7.58x.

The Valuation Gap compares the estimated Fair Value with the current stock price of $1179.27. Under the current assumptions, the Valuation Gap is -45.6%.