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As of today, Cummins Inc's current share price is $142.66. Cummins Inc's E10 for the quarter that ended in Sep. 2016 was $6.87. Cummins Inc's Shiller P/E Ratio for today is 20.77.
During the past 13 years, Cummins Inc's highest Shiller P/E Ratio was 52.64. The lowest was 10.87. And the median was 25.87.
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.
Cummins Inc's adjusted earnings per share data for the three months ended in Sep. 2016 was $1.720. Add all the adjusted EPS for the past 10 years together and divide 10 will get our E10, which is $6.87 for the trailing ten years ended in Sep. 2016.
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.
Cummins Inc's Shiller P/E Ratio for today is calculated as
|Shiller P/E Ratio||=||Share Price||/||E10|
Cummins Inc's E10 for the fiscal year that ended in Dec15 is calculated as:
For example, Cummins Inc's adjusted earnings per share data for the three months ended in Sep. 2016 was:
|Adj_EPS||=||Earnigns per Share||/||CPI of Sep. 2016 (Change)||*||Current CPI (Sep. 2016)|
Current CPI (Sep. 2016) = 241.428.
Cummins Inc Quarterly Data
|per share eps||2.430||2.320||2.440||2.140||2.620||2.140||0.940||1.870||2.400||1.720|
|per share eps||2.860||2.380||2.470||1.860||1.950||1.490||2.200||1.900||2.310||1.830|
|per share eps||0.280||0.480||1.360||0.750||1.250||1.440||1.850||1.750||2.600||2.350|
|per share eps||0.938||0.710||1.060||0.920||1.005||0.970||1.490||1.170||0.220||0.040|
Add all the adjusted EPS together and divide 10 will get our E10.
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.
The Shiller P/E assumes that over the long term, businesses and profitability revert to their means. If a companys business model does not work in the future compared with the past, the Shiller P/E and P/S ratio will give false valuations.
Cummins Inc Annual Data
Cummins Inc Quarterly Data