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Electro Rent Corp (NAS:ELRC)
E10
$0.84 (As of May. 2014)

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.

Electro Rent Corp's adjusted earnings per share data for the three months ended in May. 2014 was $0.188. 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 $0.84 for the trailing six years ended in May. 2014.

As of today, Electro Rent Corp's current stock price is $13.94. Electro Rent Corp's E10 for the trailing six years ended in May. 2014 was $0.84. Electro Rent Corp's Shiller P/E Ratio of today is 16.50.

During the past 13 years, the highest Shiller P/E Ratio of Electro Rent Corp was 30.55. The lowest was 10.81. And the median was 20.12.


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, Electro Rent Corp's adjusted earnings per share data for the three months ended in May. 2014 was:

Adj_EPS=Earnigns per Share/CPI of May. 2014*CPI of Current
=0.188/237.9*238.064
=0.188

Since most companies do not have as long as 10 years history, here we use 6 years to calculate:

Current CPI = 238.064.

Electro Rent Corp Quarterly Data

201202201205201208201211201302201305201308201311201402201405
per share eps 0.2100.2600.2100.2600.2100.2570.2300.2300.1900.188
CPI 227.663229.815230.379230.221232.166232.945233.877233.069234.781237.900
Adj_EPS 0.2200.2690.2170.2690.2150.2630.2340.2350.1930.188
200908200911201002201005201008201011201102201105201108201111
per share eps 0.0900.1700.0900.1400.2200.3000.2100.2630.3500.250
CPI 215.834216.330216.741218.178218.312218.803221.309225.964226.545226.230
Adj_EPS 0.0990.1870.0990.1530.2400.3260.2260.2770.3680.263
200808200811200902200905
per share eps 0.1700.1400.0800.083
CPI 219.086212.425212.193213.856
Adj_EPS 0.1850.1570.0900.092

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.

Electro Rent Corp's Shiller P/E Ratio of today is calculated as

Shiller P/E Ratio=Share Price/E10
=13.94/0.84
=16.60

* 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 Electro Rent Corp was 30.55. The lowest was 10.81. And the median was 20.12.


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.

Electro Rent Corp Annual Data

May05May06May07May08May09May10May11May12May13May14
e10 0.660.630.540.590.780.780.790.820.840.84

Electro Rent Corp Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
e10 0.810.820.830.830.830.840.840.840.840.84
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