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As of today, Shire PLC's current share price is $241.91. Shire PLC's E10 for the quarter that ended in Dec. 2014 was $5.86. Shire PLC's Shiller P/E Ratio for today is 41.28.
During the past 13 years, Shire PLC's highest Shiller P/E Ratio was 143.70. The lowest was 30.30. And the median was 64.32.
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.
Shire PLC's adjusted earnings per share data for the three months ended in Dec. 2014 was $11.019. 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 $5.86 for the trailing six years ended in Dec. 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.
Shire PLC's Shiller P/E Ratio for today is calculated as
|Shiller P/E Ratio||=||Share Price||/||E10|
Shire PLC's E10 for the fiscal year that ended in Dec14 is calculated as:
For example, Shire PLC's adjusted earnings per share data for the three months ended in Dec. 2014 was:
|Adj_EPS||=||Earnigns per Share||/||CPI of Dec. 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 = 233.808.
Shire PLC Quarterly Data
|per share eps||1.188||0.213||0.354||1.359||1.464||0.321||1.182||2.658||2.427||11.066|
|per share eps||0.891||0.858||0.519||0.838||1.110||1.077||1.017||1.284||1.242||1.239|
|per share eps||1.155||0.243||0.327||0.950|
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.
Shire PLC Annual Data
Shire PLC Quarterly Data