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what it is
Elanco sells medicines and treatments for pets and farm animals across more than 200 brands.
how it gets paid
Last year Elanco Animal made $4.7B in revenue. Farm Animal was the main engine at $2.40B, or 51% of sales.
why it's growing
Revenue grew 6.2% last year. Farm animal revenue gained ~12% in the segment table, supported by higher volumes in the U.S.
what just happened
Latest quarterly EPS came in at $0.13 versus a consensus estimate of -$0.18.
At a glance
B+ balance sheet — decent shape, but not bulletproof
10/100 earnings predictability — expect surprises
72.3x trailing p/e — you're paying up for this one
6.0% return on capital — nothing to write home about
xvary composite: 60/100 — average
What they do
Elanco sells medicines and treatments for pets and farm animals across more than 200 brands.
Elanco wins because animal health is sticky. Once your vet, rancher, or distributor trusts a product, switching is a hassle with real animal-health risk. That scale matters: Elanco has more than 200 brands, 46% of revenue comes from the U.S., and distributor Cencora accounted for 10% of 2024 revenue.
How they make money
$4.7B
annual revenue · their business grew +6.2% last year
Pet Health
$2.26B
+6.2%
Farm Animal
$2.40B
+12.0%
Contract Manufacturing
$0.05B
+6.2%
The products that matter
pet medicines and parasite control
Companion Animal
$2.26B · ~48% of revenue
Aligns with Pet Health in the segment table (~$2.26B). Farm animal is the larger line at ~$2.40B—do not use alternate $/pct blocks that skip the table.
core segment
livestock health products
Food-Animal
$2.40B · ~51% of revenue
Farm Animal per the table—+12% vs. prior year in this snapshot—this is the line that moved faster than pet last year.
cash base
new launches and pipeline revenue
new-product portfolio
$1.15B target · 2026
Management raised its 2026 new-product revenue target to $1.15B. That's the scoreboard for the turnaround. If fresh products scale, the margin case looks more believable.
catalyst watch
Key numbers
72.3x
trailing p/e
Jargon → P/E → price compared with the last year of profit → so what: you are paying a premium multiple for a company with just 6.0% return on capital.
$4.0B
long-term debt
That debt equals 27% of capital, which is workable but leaves less room for mistakes than a cleaner balance sheet.
23.0%
operating margin
Jargon → operating margin → profit after running the business → so what: the core business is profitable, but the stock price assumes that margin holds.
6.0%
return on capital
Jargon → return on capital → profit earned on money invested in the business → so what: 6 cents on each dollar is okay, not elite.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 30 / 100
- long-term debt $4.0B (27% of capital)
- net profit margin 10.5% — keeps 10 cents of every dollar in revenue
- return on equity 8% — $0.08 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in ELAN 3 years ago → it's now worth $17,760.
The index would have given you $13,920.
source: institutional data · total return
What just happened
beat estimates
Latest quarterly EPS came in at $0.13 versus a consensus estimate of -$0.18.
Revenue in the quarter reached $1.14B, up more than 10% vs. prior year in the base data, with Farm Animal up 12%. Annual revenue was $4.7B, up 6.2%, and gross margin was 56.1%.
$1.14B
revenue
$0.13
eps
56.1%
gross margin
the number that mattered
The $1.14B revenue print mattered because it showed real demand growth, not just cost-cutting, in a stock that already rallied more than 80% this year.
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elanco animal health's shares have staged a sharp rally this year, rising more than 80% year to date.much of this strength can be traced to continued momentum across several key products, including credelio quattro, experior, adtab, and zenrelia.
-
investor sentiment has also been supported by recent insider purchases by senior executives.third-quarter results were solid on the revenue front, but the bottom line needs some clarification.
-
the top line increased more than 10% vs. prior year, to $1.14 billion.
-
looking at revenues closely, the farm animal segment (52% of total revenue) gained 12%, supported by higher volumes in u.s. cattle and poultry, where experior continued to gain traction.
-
this strength was partially offset by softer international farm animal sales.
source: company earnings report, 2026
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What could go wrong
ELAN's risk stack is unusually concrete on this page: a live Advantix lawsuit, a 3.0% net margin, a 3.9x net leverage ratio, and a $1.15B new-product target that still has to be earned.
high
Advantix litigation
A consumer lawsuit alleges price-fixing tied to the Advantix product line. The case was narrowed, not dismissed, in October 2025.
This snapshot does not quantify Advantix revenue, which is the problem. You know the legal risk is real, but not the exact sales exposure from this page alone.
high
thin margins
Elanco posts a 55% gross margin but only a 3.0% net margin. Most of the economics disappear before they reach shareholders.
When a company keeps just 3 cents on the dollar, pricing pressure, legal costs, or execution misses hit harder.
med
new-product target miss
Management raised its 2026 new-product revenue target to $1.15B. If that slips, the growth story takes a direct hit.
This matters because the stock is being asked to improve before the business economics fully do.
med
balance sheet drag
Net leverage is down to 3.9x from 5.6x, which is progress. It is still debt-heavy for a business with a 3.0% net margin.
With $4.0B in long-term debt and debt equal to 27% of capital, ELAN has less flexibility than cleaner balance sheet peers.
At 3.9x net leverage and a 3.0% net margin, there is not much room for a legal bill, a pricing squeeze, or a miss on new launches.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
$1.15B new-product target
This is the cleanest operating scoreboard on the page. If new products do not scale, the re-rating story gets thin fast.
risk
Advantix lawsuit
Watch for court developments and any sign that the case starts to affect pricing, product placement, or legal reserves.
trend
companion animal mix
Companion Animal is $2.8B and growing 8%, versus 4% for Food-Animal. You want the faster segment to keep taking more of the mix.
calendar
debt ratio below 3.9x
Debt improved from 5.6x to 3.9x. Another step down would make the turnaround case more credible.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — in human-speak, analysts expect above-average price performance over the next year.
risk profile
average
stability score 3 — not especially defensive, not a disaster either.
chart momentum
top 20%
technical score 2 — the tape looks better than the business quality score would suggest.
earnings predictability
10 / 100
Low predictability means the earnings line is noisy. You should expect revisions and surprises.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 231 buyers vs. 141 sellers in 3q2025. total institutional holdings: 0.6B shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$7
$28
$22
current price
$18
target midpoint · 17% from current · 3-5yr high: $28
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