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As of today, Red Hat Inc's current share price is $56.42. Red Hat Inc's E10 for the quarter that ended in Aug. 2014 was $0.71. Red Hat Inc's Shiller P/E Ratio for today is 79.20.
During the past 13 years, Red Hat Inc's highest Shiller P/E Ratio was 2424.00. The lowest was 29.52. And the median was 86.97.
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.
Red Hat Inc's adjusted earnings per share data for the three months ended in Aug. 2014 was $0.250. 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 $0.71 for the trailing six years ended in Aug. 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.
Red Hat Inc's Shiller P/E Ratio for today is calculated as
|Shiller P/E Ratio||=||Share Price||/||E10|
Red Hat Inc's E10 for the fiscal year that ended in Feb14 is calculated as:
For example, Red Hat Inc's adjusted earnings per share data for the three months ended in Aug. 2014 was:
|Adj_EPS||=||Earnigns per Share||/||CPI of Aug. 2014||*||CPI of Current|
Since most companies do not have as long as 10 years history, here we use 6 years to calculate:
Current CPI = 238.064.
Red Hat Inc Quarterly Data
|per share eps||0.190||0.180||0.180||0.220||0.210||0.210||0.270||0.235||0.200||0.250|
|per share eps||0.080||0.121||0.120||0.120||0.130||0.169||0.170||0.200||0.190||0.183|
|per share eps||0.120||0.081||0.100||0.150|
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.
Red Hat Inc Annual Data
Red Hat Inc Quarterly Data