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Arthur J Gallagher & Co (NYSE:AJG)
Shiller P/E Ratio
28.74 (As of Today)

As of today, Arthur J Gallagher & Co's current share price is $47.42. Arthur J Gallagher & Co's E10 for the quarter that ended in Sep. 2014 was $1.65. Arthur J Gallagher & Co's Shiller P/E Ratio for today is 28.74.

AJG' s 10-Year Shiller P/E Ratio Range
Min: 11.79   Max: 32.44
Current: 28.68

11.79
32.44

During the past 13 years, Arthur J Gallagher & Co's highest Shiller P/E Ratio was 32.44. The lowest was 11.79. And the median was 21.24.

AJG's Shiller P/E Ratiois ranked higher than
81% of the 479 Companies
in the Global Insurance Brokers industry.

( Industry Median: 54.15 vs. AJG: 28.68 )

E10 is a concept invented by Prof. Robert Shiller, who uses E10 for his Shiller P/E calculation. E10 is the average of the inflation adjusted earnings of a company over the past 10 years.

Arthur J Gallagher & Co's adjusted earnings per share data for the three months ended in Sep. 2014 was $0.574. Since most companies do not have as long as 10 years history, here we use 6 years to calculate. Add all the adjusted EPS for the past 6 years together and divide 6 will get our E10, which is $1.65 for the trailing six years ended in Sep. 2014.


Definition

For the Shiller P/E, the earnings of the past 10 years are inflation-adjusted and averaged. The result is used for P/E calculation. Since it looks at the average over the last 10 years, the Shiller P/E is also called PE10.

The Shiller P/E was first used by professor Robert Shiller to measure the valuation of the overall market. The same calculation is applied here to individual companies.

Arthur J Gallagher & Co's Shiller P/E Ratio for today is calculated as

Shiller P/E Ratio=Share Price/E10
=47.42/1.65
=28.74

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Arthur J Gallagher & Co's E10 for the fiscal year that ended in Dec13 is calculated as:

For example, Arthur J Gallagher & Co's adjusted earnings per share data for the three months ended in Sep. 2014 was:

Adj_EPS=Earnigns per Share/CPI of Sep. 2014*CPI of Current
=0.58/238.031*235.51
=0.574

Since most companies do not have as long as 10 years history, GuruFocus uses 6 years to do the calculation.

Current CPI = 235.51.

Arthur J Gallagher & Co Quarterly Data

201206201209201212201303201306201309201312201403201406201409
per share eps 0.5900.5000.2650.3200.7300.5700.4470.3600.7000.580
CPI 229.478231.407229.601232.773233.504234.149233.049236.293238.343238.031
Adj_EPS 0.6060.5090.2720.3240.7360.5730.4520.3590.6920.574
200912201003201006201009201012201103201106201109201112201203
per share eps 0.1650.2800.4200.4400.5100.1400.3700.4100.3520.240
CPI 215.949217.631217.965218.439219.179223.467225.722226.889225.672229.392
Adj_EPS 0.1800.3030.4540.4740.5480.1480.3860.4260.3670.246
200812200903200906200909
per share eps 0.0490.2700.4400.410
CPI 210.228212.709215.693215.969
Adj_EPS 0.0550.2990.4800.447

Add all the adjusted EPS together and divide 6 will get our E10.


Explanation

Compared with the regular P/E ratio, which works poorly for cyclical businesses, the Shiller P/E smoothed out the fluctuations of profit margins during business cycles. Therefore it is more accurate in reflecting the valuation of the company.

If a company has consistent business performance, the Shiller P/E should give similar results to regular P/E.

Compared with the P/S ratio, the Shiller P/E makes the comparison between different industries more meaningful.


Be Aware

The Shiller P/E assumes that over the long term, businesses and profitability revert to their means. If a company’s business model does not work in the future compared with the past, the Shiller P/E and P/S ratio will give false valuations.


Related Terms

P/E Ratio, P/B Ratio, P/S Ratio, Price-to-Free-Cash-Flow ratio, E10


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Arthur J Gallagher & Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
ShillerPE 22.3522.5920.8316.7719.9018.0725.0424.4924.7731.19

Arthur J Gallagher & Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
ShillerPE 24.7825.3024.7728.6529.4929.5831.1929.8828.2027.26
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