Amazon.com, Inc. (AMZN)vs Eli Lilly and Company (LLY)

Quick verdict

Amazon.com, Inc. (AMZN) and Eli Lilly and Company (LLY) appeal to different investors. On our six-factor framework, AMZN scores 5.5 and LLY scores 0.5. AMZN looks cheaper on the multiples that matter, while AMZN grows faster and neither clearly earns higher returns on capital. Overall, AMZN edges this comparison, but the right pick depends on whether you prioritise value, growth, income or balance-sheet safety.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

Amazon.com, Inc. operates in Specialty Retail (Consumer Cyclical), while Eli Lilly and Company sits in Drug Manufacturers (Healthcare). The two operate in different sectors, so cyclicality and end-market exposure differ — factor that into any portfolio overlap. AMZN carries a beta of 1.46 versus 1.61 for LLY, meaning LLY has historically been the more volatile of the two.

Valuation

On valuation, AMZN is the cheaper stock. AMZN trades on a forward P/E of 45.95 and EV/EBITDA of 12.07, against 25.73 and 18.53 for LLY. Price-to-sales is 3.77 vs 5.29, and free-cash-flow yield is 2.0% vs 3.4%. A higher multiple is only justified if the company can sustain faster growth or wider margins, which is exactly what the next sections test.

Growth profile

AMZN is the faster grower. AMZN has compounded revenue at 12.4% over three years with EPS growth of 28.8%, while LLY has delivered 13.7% revenue and 16.1% EPS growth. Growth like this is the single biggest driver of long-term returns, but it also tends to come with a richer valuation, so it must be weighed against the multiples above.

Profitability and quality

On profitability and quality, neither clearly is stronger. AMZN posts a 12.1% operating margin, 30.5% return on equity and 8.5% return on invested capital. LLY posts 12.2%, 34.6% and 7.9% respectively. Return on invested capital above roughly 15% is a hallmark of a durable competitive advantage, so this metric deserves particular attention.

Balance-sheet risk

AMZN has the safer balance sheet. AMZN carries net-debt/EBITDA of 0.86x with a current ratio of 1.03, versus 1.15x and 2.81 for LLY. Lower leverage gives a company more room to invest through a downturn and reduces the risk of dilution or distress.

Price performance and shareholder returns

Over the past year AMZN returned 4.0% against 16.5% for LLY; on a three-year annualised basis it is 42.8% vs 0.6%. AMZN yields 0.0% and LLY yields 0.0%. Past performance never guarantees future results, but the multi-year track record shows how the market has rewarded each business so far.

Which stock fits which investor

For value-oriented investors, AMZN is the better fit on today's multiples. Growth investors will likely prefer AMZN, which is expanding faster. Income investors should lean toward AMZN for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour AMZN for its superior returns on capital. This is a comparison of facts, not a recommendation — your time horizon, risk tolerance and existing holdings should drive the final decision.

• Value: AMZN
• Growth: AMZN
• Income: AMZN
• Quality: AMZN

Frequently asked questions

Is AMZN or LLY the better buy right now?

Neither is universally "better." AMZN scores 5.5 and LLY scores 0.5 on our six-factor framework. AMZN is cheaper, AMZN grows faster, and neither clearly is higher quality — so the right pick depends on your objective.

Which stock is cheaper, AMZN or LLY?

AMZN is the cheaper stock across forward P/E (45.95 vs 25.73), EV/EBITDA (12.07 vs 18.53) and price-to-sales (3.77 vs 5.29).

Which has grown faster, AMZN or LLY?

AMZN has the stronger growth profile, with three-year revenue CAGR of 12.4% for AMZN versus 13.7% for LLY.

Which stock pays a bigger dividend?

AMZN yields 0.0% and LLY yields 0.0%, so AMZN is the stronger income choice.

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