Switch to:
Darden Restaurants Inc (NYSE:DRI)
E10
$3.56 (As of May. 2015)

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.

Darden Restaurants Inc's adjusted earnings per share data for the three months ended in May. 2015 was $0.822. 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 $3.56 for the trailing six years ended in May. 2015.

As of today, Darden Restaurants Inc's current stock price is $73.80. Darden Restaurants Inc's E10 for the trailing six years ended in May. 2015 was $3.56. Darden Restaurants Inc's Shiller P/E Ratio of today is 20.73.

During the past 13 years, the highest Shiller P/E Ratio of Darden Restaurants Inc was 28.10. The lowest was 7.41. And the median was 17.93.


Definition

E10 is a concept invented by Prof. Robert Shiller, who uses E10 for his Shiller P/E calculation. When we calculate the today’'s Shiller P/E ratio of a stock, we use today’s price divided by E10.

What is E10? How do we calculate E10?

E10 is the average of the inflation adjusted earnings of a company over the past 10 years. Let’s use an example to explain.

If we want to calculate the E10 of Wal-Mart (WMT) for Dec. 31, 2010, we need to have the inflation data and the earnings from 2001 through 2010.

We adjusted the earnings of 2001 earnings data with the total inflation from 2001 through 2010 to the equivalent earnings in 2010. If the total inflation from 2001 to 2010 is 40%, and Wal-Mart earned $1 a share in 2001, then the 2001’s equivalent earnings in 2010 is $1.4 a share. If Wal-Mart earns $1 again in 2002, and the total inflation from 2002 through 2010 is 35%, then the equivalent 2002 earnings in 2010 is $1.35. So on and so forth, you get the equivalent earnings of past 10 years. Then you add them together and divided the sum by 10 to get E10.

For example, Darden Restaurants Inc's adjusted earnings per share data for the three months ended in May. 2015 was:

Adj_EPS=Earnigns per Share/CPI of May. 2015*CPI of Current
=0.819/237.805*238.709
=0.822

Since most companies do not have as long as 10 years history, GuruFocus uses 6 years to do the calculation.

Current CPI = 238.709.

Darden Restaurants Inc Quarterly Data

201302201305201308201311201402201405201408201411201502201505
per share eps 1.0201.0070.5300.1500.8200.6453.810-0.2601.0500.819
CPI 232.166232.945233.877233.069234.781237.900237.852236.151234.722237.805
Adj_EPS 1.0491.0320.5410.1540.8340.6473.824-0.2631.0680.822
201008201011201102201105201108201111201202201205201208201211
per share eps 0.8000.5301.0800.9950.7800.4001.2501.1510.8500.260
CPI 218.312218.803221.309225.964226.545226.230227.663229.815230.379230.221
Adj_EPS 0.8750.5781.1651.0510.8220.4221.3111.1960.8810.270
200908200911201002201005
per share eps 0.6700.4300.9400.802
CPI 215.834216.330216.741218.178
Adj_EPS 0.7410.4741.0350.877

Add all the adjusted EPS together and divide 6 will get our e10.


Explanation

If a company grows much fast than inflation, E10 may underestimate the company's earnings power. Shiller P/E Ratio can seem to be too high even the actual P/E is low.

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.

Darden Restaurants Inc's Shiller P/E Ratio of today is calculated as

Shiller P/E Ratio=Share Price/E10
=73.80/3.56
=20.73

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

During the past 13 years, the highest Shiller P/E Ratio of Darden Restaurants Inc was 28.10. The lowest was 7.41. And the median was 17.93.


Be Aware

Shiller P/E Ratio works better for cyclical companies. It gives you a better idea on the company's real earnings power.


Related Terms

Shiller P/E Ratio


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Darden Restaurants Inc Annual Data

May06May07May08May09May10May11May12May13May14May15
e10 1.611.671.922.082.352.652.893.223.153.56

Darden Restaurants Inc Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
e10 2.953.223.173.143.113.153.683.523.593.56
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK