Eli Lilly and Company (LLY)vs Pfizer Inc. (PFE)

Quick verdict

Eli Lilly and Company (LLY) and Pfizer Inc. (PFE) appeal to different investors. On our six-factor framework, LLY scores 2 and PFE scores 4. PFE looks cheaper on the multiples that matter, while LLY grows faster and PFE earns higher returns on capital. Overall, PFE 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

Eli Lilly and Company operates in Drug Manufacturers (Healthcare), while Pfizer Inc. sits in Drug Manufacturers - General (Healthcare). Because both compete in the same sector, this is a direct head-to-head and the financial differences below are especially meaningful. LLY carries a beta of 1.61 versus 0.28 for PFE, meaning LLY has historically been the more volatile of the two.

Valuation

On valuation, PFE is the cheaper stock. LLY trades on a forward P/E of 25.73 and EV/EBITDA of 18.53, against 12.65 and 12.27 for PFE. Price-to-sales is 5.29 vs 2.25, and free-cash-flow yield is 3.4% vs 1.0%. 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

LLY is the faster grower. LLY has compounded revenue at 13.7% over three years with EPS growth of 16.1%, while PFE has delivered -1.6% revenue and -4.2% 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, PFE is stronger. LLY posts a 12.2% operating margin, 34.6% return on equity and 7.9% return on invested capital. PFE posts 23.4%, 8.4% and 8.0% 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

LLY has the safer balance sheet. LLY carries net-debt/EBITDA of 1.15x with a current ratio of 2.81, versus 1.53x and 1.25 for PFE. 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 LLY returned 16.5% against 85.4% for PFE; on a three-year annualised basis it is 0.6% vs -3.0%. LLY yields 0.0% and PFE yields 6.9%. 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, PFE is the better fit on today's multiples. Growth investors will likely prefer LLY, which is expanding faster. Income investors should lean toward PFE for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour PFE 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: PFE
• Growth: LLY
• Income: PFE
• Quality: PFE

Frequently asked questions

Is LLY or PFE the better buy right now?

Neither is universally "better." LLY scores 2 and PFE scores 4 on our six-factor framework. PFE is cheaper, LLY grows faster, and PFE is higher quality — so the right pick depends on your objective.

Which stock is cheaper, LLY or PFE?

PFE is the cheaper stock across forward P/E (25.73 vs 12.65), EV/EBITDA (18.53 vs 12.27) and price-to-sales (5.29 vs 2.25).

Which has grown faster, LLY or PFE?

LLY has the stronger growth profile, with three-year revenue CAGR of 13.7% for LLY versus -1.6% for PFE.

Which stock pays a bigger dividend?

LLY yields 0.0% and PFE yields 6.9%, so PFE is the stronger income choice.

Related comparisons

• AAPL vs LLY
• AMD vs LLY
• AMZN vs LLY
• LLY vs NVO
• LLY vs UNH
• MSFT vs LLY