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As of today, Encana Corp's current share price is $6.55. Encana Corp's E10 for the quarter that ended in Dec. 2015 was $1.80. Encana Corp's Shiller P/E Ratio for today is 3.64.
During the past 13 years, Encana Corp's highest Shiller P/E Ratio was 6.82. The lowest was 1.73. And the median was 4.58.
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.
Encana Corp's adjusted earnings per share data for the three months ended in Dec. 2015 was $-0.723. Add all the adjusted EPS for the past 10 years together and divide 10 will get our E10, which is $1.80 for the trailing ten years ended in Dec. 2015.
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.
Encana Corp's Shiller P/E Ratio for today is calculated as
|Shiller P/E Ratio||=||Share Price||/||E10|
Encana Corp's E10 for the fiscal year that ended in Dec15 is calculated as:
For example, Encana Corp's adjusted earnings per share data for the three months ended in Dec. 2015 was:
|Adj_EPS||=||Earnigns per Share||/||CPI of Dec. 2015 (Change)||*||Current CPI (Dec. 2015)|
Current CPI (Dec. 2015) = 236.525.
Encana Corp Quarterly Data
|per share eps||0.250||-0.339||0.160||0.370||3.790||0.267||-2.250||-1.910||-1.470||-0.723|
|per share eps||-0.490||0.520||0.620||-0.646||0.020||-2.010||-1.690||-0.109||-0.590||0.990|
|per share eps||4.730||1.434||1.280||0.320||0.030||0.846||1.960||-0.620||0.800||0.956|
|per share eps||1.701||2.553||1.652||1.152||0.640||1.889||1.241||1.401||0.120||1.630|
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.
Encana Corp Annual Data
Encana Corp Quarterly Data