Eli Lilly and Company (LLY)vs Novo Nordisk A/S (NVO)

Quick verdict

Eli Lilly and Company (LLY) and Novo Nordisk A/S (NVO) appeal to different investors. On our six-factor framework, LLY scores 4 and NVO scores 2. LLY looks cheaper on the multiples that matter, while LLY grows faster and NVO earns higher returns on capital. Overall, LLY 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 Novo Nordisk A/S sits in Drug Manufacturers (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 1.80 for NVO, meaning NVO has historically been the more volatile of the two.

Valuation

On valuation, LLY is the cheaper stock. LLY trades on a forward P/E of 25.73 and EV/EBITDA of 18.53, against 31.06 and 30.66 for NVO. Price-to-sales is 5.29 vs 17.63, and free-cash-flow yield is 3.4% vs 5.8%. 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 NVO has delivered 13.2% revenue and 10.4% 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, NVO is stronger. LLY posts a 12.2% operating margin, 34.6% return on equity and 7.9% return on invested capital. NVO posts 12.9%, 17.3% and 30.2% 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 4.18x and 2.55 for NVO. 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 76.3% for NVO; on a three-year annualised basis it is 0.6% vs 30.4%. LLY yields 0.0% and NVO 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, LLY is the better fit on today's multiples. Growth investors will likely prefer LLY, which is expanding faster. Income investors should lean toward LLY for its higher shareholder yield, while investors who prize quality-at-a-reasonable-price will favour NVO 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: LLY
• Growth: LLY
• Income: LLY
• Quality: NVO

Frequently asked questions

Is LLY or NVO the better buy right now?

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

Which stock is cheaper, LLY or NVO?

LLY is the cheaper stock across forward P/E (25.73 vs 31.06), EV/EBITDA (18.53 vs 30.66) and price-to-sales (5.29 vs 17.63).

Which has grown faster, LLY or NVO?

LLY has the stronger growth profile, with three-year revenue CAGR of 13.7% for LLY versus 13.2% for NVO.

Which stock pays a bigger dividend?

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