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.
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.
Beaware
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.
Related Terms
P/B Ratio,
P/E Ratio,
P/S Ratio,
Price-to-Free-Cash-Flow ratio,
E10* All numbers are in millions except for per share dataForest City Enterprises Inc Annual Data
| Jan04 | Jan05 | Jan06 | Jan07 | Jan08 | Jan09 | Jan10 | Jan11 | Jan12 | Jan13 |
|---|
| ShillerPE |  | | | | | | | | | |
|---|
Forest City Enterprises Inc Quarterly Data
| Jan11 | Apr11 | Jul11 | Oct11 | Jan12 | Apr12 | Jul12 | Oct12 | Jan13 | Apr13 |
|---|
| ShillerPE | | | | | | | | | | |
|---|
European Shorting
FCE.A has been successfully added into Your Stock Email Alerts list.
Feedback
My Portfolios
Browse Gurus
Bookmark
Add to Portfolio
Get Email Alerts
RSS Update
Company Website
SEC Reports
RSS