ELAN Fair Value
What is the fair value of ELAN?
As of 2025-05-23, the Fair Value of Elanco Animal Health Inc (ELAN) is 3.76 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 12.67 USD, the upside of Elanco Animal Health Inc is -70.4%.
Is ELAN a good investment?
With the market price of 12.67 USD and our fair value calculation, Elanco Animal Health Inc (ELAN) is not a good investment. Investing in ELAN stocks now will result in a potential loss of 70.4%.
Peter Lynch's formula is:
The earnings growth rate we use in the formula is the average growth rate of net income/earnings over the last 5 years. If the average growth rate is smaller than 5%, we set it to 5%. If it is larger than 25%, we set it to 25%. If the TTM EPS is negative, Peter Lynch Fair Value's result can be unreliable.
| Historical Earnings | ||||||
| 12-2020 | 12-2021 | 12-2022 | 12-2023 | 12-2024 | 5Y Avg | |
| Net income | -574 | -483 | -78 | -1,231 | 338 | -406 |
| YoY growth | -945.4% | 15.9% | 83.9% | -1478.2% | 127.5% | -439.3% |
| Market Cap (mil) | EPS | Fair Value | Upside | ||
| a | |||||
Elanco Animal Health Inc | 6,290 | 0.8 | 3.76 | -70.4% | |
| Eli Lilly and Co | 678,002 | 11.7 | 146.35 | -79.5% | |
| Johnson & Johnson | 367,190 | 9.1 | 110.76 | -27.4% | |
| Merck & Co Inc | 195,876 | 6.9 | 173.2 | 122.5% | |
| Pfizer Inc | 130,670 | 1.4 | 34.75 | 50.8% | |
| Bristol-Myers Squibb Co | 95,710 | 2.7 | 13.31 | -71.7% | |
| Zoetis Inc | 72,248 | 5.6 | 61.28 | -62.2% | |
| Royalty Pharma PLC | 18,556 | 1.9 | 47.56 | 47.2% | |
| Catalent Inc | 11,522 | -2.3 | -11.38 | -117.9% | |
| Market Cap (mil) | 6,290 |
| P/E | 16.9x |
| Forward P/E | 15.4x |
| EPS | 0.75 |
| Avg earnings growth rate | -439.3% |
| TTM earnings | 373 |
Peter Lynch is one of the most legendary investors/fund managers of all time. His philosophy for stock investing is very simple and straightforward: he invests in stocks that are undervalued, meaning its P/E is less than or equal to its earnings growth rate. He believes that if a stock is trading at its fair value, the PEG ratio, which was also invented by him, should be 1.
Therefore, his formula to determine a company's fair value is:
Peter Lynch Fair Value = Earnings Growth Rate * EPS * PEG
PEG is set to 1 so we can ignore it in the calculation. Based on the formula, if the earnings growth rate of a company is 15%, Peter Lynch is willing to buy its share up to P/E = 15.