NVIDIA Corporation (NVDA)vs Eli Lilly and Company (LLY)

Quick verdict

NVIDIA (NVDA) and Eli Lilly (LLY) present contrasting investment profiles. NVDA earns the stronger overall score (5 vs 1) with A grades in growth, quality, balance sheet, income and momentum, and only valuation marked B. Its forward P/E of 10.38 and PEG of 0.28 indicate the market expects substantial earnings growth relative to price, despite a trailing P/E of 30.92. LLY's trailing P/E of 11.81 looks lower, but its forward P/E of 25.73 signals expected margin or growth normalisation. NVDA's 1-year return of 75.11% dwarfs LLY's 16.53%, though both show weak 3-year annualised returns (3.02% and 0.62% respectively). NVDA's beta of 2.211 versus LLY's 1.61 confirms higher relative volatility, consistent with NVDA's 'high-growth, value' style tag against LLY's 'high-volatility' tag.

2-year relative performance

At-a-glance comparison

Business model and revenue mix

NVIDIA designs advanced graphics, computing and networking hardware, with its Graphics division built around GeForce GPUs for gaming, alongside GeForce NOW cloud gaming infrastructure, serving markets across the US, Taiwan and China. It operates within the Semiconductors industry under the Technology sector. Eli Lilly is a Drug Manufacturer within the Healthcare sector, though the supplied description does not detail specific product lines. The two companies differ fundamentally in end markets: NVDA is exposed to hardware and compute demand cycles, while LLY operates in pharmaceutical manufacturing, a sector typically characterised by longer development cycles and regulatory considerations not detailed in this dataset.

Valuation

NVDA trades on a trailing P/E of 30.92 but a forward P/E of just 10.38, alongside a PEG of 0.28, suggesting the market anticipates strong forward earnings growth relative to price. Its price-to-sales ratio of 19.38 and price-to-book of 25.2 remain elevated, and EV/EBITDA stands at 25.45. LLY shows a lower trailing P/E of 11.81 but a higher forward P/E of 25.73 and PEG of 1.05, indicating expected earnings deceleration or margin normalisation. LLY's price-to-sales of 5.29 is notably lower than NVDA's, though its price-to-book of 15.34 remains high. NVDA's overall valuation grade is B versus an unspecified grade for LLY, with the 'bestFor value' tag assigned to LLY.

Growth profile

NVDA's growth metrics are substantially stronger across all measured horizons: 3-year revenue CAGR of 65.47% and 5-year revenue CAGR of 21.13%, compared with LLY's 13.72% and 15.23% respectively. EPS growth shows a similar pattern, with NVDA posting a 3-year EPS CAGR of 65.99% and 5-year figure of 32.08%, versus LLY's 16.05% and 15.37%. Both companies carry an 'A' growth verdict, but NVDA's growth rates are markedly higher across both revenue and earnings, consistent with its 'high-growth' style tag. LLY's growth, while lower in absolute terms, remains steady and less volatile relative to NVDA's figures.

Profitability and quality

NVDA demonstrates substantially higher profitability across all margin measures: gross margin of 74.15%, operating margin of 64.02%, and net margin of 62.97%, versus LLY's 42.56%, 12.15% and 35.79% respectively. Returns on capital also favour NVDA, with ROE of 111.66% and ROIC of 62.99%, compared with LLY's ROE of 34.62% and ROIC of 7.86%. Both firms carry an 'A' quality grade, but the underlying figures show NVDA converting a far greater share of revenue into profit and generating stronger returns on invested capital, a distinction relevant to the 'bestFor quality' designation assigned to NVDA.

Balance-sheet risk

NVDA holds cash of approximately $10.10 billion against total debt of $69.33 billion, but its net debt/EBITDA ratio of -0.17 indicates net cash relative to earnings, supported by a current ratio of 3.44 and interest coverage of 27.55x. LLY holds a smaller cash position of $3.73 billion against total debt of $52.95 billion, with a net debt/EBITDA ratio of 1.15 and a lower interest coverage of 14.96x, though its current ratio of 2.81 still indicates adequate short-term liquidity. Both companies carry an 'A' balance sheet grade, but NVDA's net cash position and higher interest coverage point to a comparatively stronger debt-servicing capacity.

Price performance and shareholder returns

NVDA has delivered a 1-year return of 75.11% and a YTD return of 2.83%, though its 3-year annualised return of 3.02% is modest relative to its 5-year annualised return of 32.41%. LLY's 1-year return of 16.53% and YTD return of 28.15% trail NVDA's shorter-term figures but its 5-year annualised return of 6.49% is well below NVDA's. Volatility differs too: NVDA's maximum 5-year drawdown of -29.43% is shallower than LLY's -39.56%, despite NVDA's higher beta of 2.211 versus LLY's 1.61. Both carry an 'A' momentum verdict for NVDA, with income-oriented investors noting LLY's dividend yield of 0% and payout ratio of 58.61% against NVDA's dividend yield of 0.14% and payout ratio of 0.61%.

Which stock fits which investor

Based on the supplied verdicts, NVDA is tagged as 'high-growth, value' and carries the higher overall score of 5, with 'bestFor' designations in growth and quality. LLY is tagged 'high-volatility' and is designated 'bestFor' value and income within this dataset. Investors prioritising revenue and earnings expansion, profitability margins, and balance sheet strength may find NVDA's metrics more aligned with those objectives, while those focused on trailing valuation multiples or income characteristics may reference LLY's lower trailing P/E of 11.81 and payout ratio of 58.61%. This is a factual comparison only and does not constitute investment advice.

• Value: LLY
• Growth: NVDA
• Income: NVDA
• Quality: NVDA

Frequently asked questions

Which company has stronger revenue growth, NVDA or LLY?

NVDA shows stronger revenue growth, with a 3-year CAGR of 65.47% and 5-year CAGR of 21.13%, compared with LLY's 13.72% and 15.23% respectively.

Which stock has a lower valuation?

It depends on the measure. LLY has a lower trailing P/E of 11.81 versus NVDA's 30.92, but NVDA has a lower forward P/E of 10.38 versus LLY's 25.73, and a lower PEG ratio of 0.28 versus 1.05.

Which company carries more balance sheet risk?

LLY shows a higher net debt/EBITDA of 1.15 and lower interest coverage of 14.96x, compared with NVDA's net cash position (net debt/EBITDA of -0.17) and interest coverage of 27.55x.

Which stock has performed better recently?

NVDA's 1-year return of 75.11% exceeds LLY's 16.53%, though LLY's year-to-date return of 28.15% is higher than NVDA's 2.83% YTD figure.

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