LLY : Looking at LLY, from a Profit Before Tax, and a pretax Return on Capital Employed perspective, one wonders if this stock holds much promise in the medium to longer term.
Fortunately its last set of Financial Statements were for a Year end, viz. 2005/12, so one can draw a better conclusion.
Looking at its Pretax Profit, we see an ongoing decline, for the last 5 years, from $3.552bil. to $2.718bil. This 23.5% fall has been steady and regular according to the following ....
$3.552bil.(2001), $3.458bil.(2002), $$3.262bil.(2003), $2.942bil.(2004) and $2.718bil.(2005).
In addition, its pretax Return on Capital Employed has also declined by over 54% from a once-healthy 31.6% to its current 14.4%, as can be seen in the following ....
31.6%, 24.7%, 20.2%, 17% and 14.4%.
IMO this is reflected in the 30% drop in LLY's price from about $76 in the first half of 2004 to its current price about $53 a share. In addition it's been moving sideways in a $52 to $58 range, which seems to indicate a lack of interest by "the Market".
Based on the above, a current P/E of 29 seems to indicate a high price to pay for this stock.
IMO one would want to see a reversal in this decline of Capital Return before one could expect to see a similar reversal in its price performance.
I see in 23300, E_K_S asked for "any suggestions from the group".
Well, personally, I wouldn't be buying LLY for much above $42 a share.
A positive, IMO, for LLY is its healthy dividend of $1.52/share and a good Dividend Cover of 1.2.
The question could be asked as to how sustainable this will be in the future ? |
