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As of today, Herbalife Ltd's current share price is $37.96. Herbalife Ltd's E10 for the quarter that ended in Sep. 2014 was $3.21. Herbalife Ltd's Shiller P/E Ratio for today is 11.83.
During the past 11 years, Herbalife Ltd's highest Shiller P/E Ratio was 34.77. The lowest was 7.52. And the median was 20.81.
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.
Herbalife Ltd's adjusted earnings per share data for the three months ended in Sep. 2014 was $0.129. 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 $3.21 for the trailing six years ended in Sep. 2014.
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.
Herbalife Ltd's Shiller P/E Ratio for today is calculated as
|Shiller P/E Ratio||=||Share Price||/||E10|
Herbalife Ltd's E10 for the fiscal year that ended in Dec13 is calculated as:
For example, Herbalife Ltd'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|
Since most companies do not have as long as 10 years history, GuruFocus uses 6 years to do the calculation.
Current CPI = 235.51.
Herbalife Ltd Quarterly Data
|per share eps||1.090||0.980||0.990||1.100||1.340||1.320||1.160||0.740||1.310||0.130|
|per share eps||0.440||0.415||0.650||0.630||0.678||0.700||0.880||0.870||0.885||0.880|
|per share eps||0.262||0.335||0.385||0.455|
Add all the adjusted EPS together and divide 6 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.
Herbalife Ltd Annual Data
Herbalife Ltd Quarterly Data