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Lowe's Companies Inc (NYSE:LOW)
E10
$1.98 (As of Jan. 2016)

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.

Lowe's Companies Inc's adjusted earnings per share data for the three months ended in Jan. 2016 was $0.010. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.98 for the trailing ten years ended in Jan. 2016.

As of today, Lowe's Companies Inc's current stock price is $79.55. Lowe's Companies Inc's E10 for the quarter that ended in Jan. 2016 was $1.98. Lowe's Companies Inc's Shiller P/E Ratio of today is 40.18.

During the past 13 years, the highest Shiller P/E Ratio of Lowe's Companies Inc was 40.31. The lowest was 10.22. And the median was 20.46.


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, Lowe's Companies Inc's adjusted earnings per share data for the three months ended in Jan. 2016 was:

Adj_EPS=Earnigns per Share/CPI of Jan. 2016 (Change)*Current CPI (Jan. 2016)
=0.01/236.916*236.916
=0.010

Current CPI (Jan. 2016) = 236.916.

Lowe's Companies Inc Quarterly Data

201401201404201407201410201501201504201507201510201601201604
per share eps 0.2800.6101.0400.5900.4630.7001.2000.8000.0100.980
CPI 233.916237.072238.250237.433233.707236.599238.654237.838236.916238.642
Adj_EPS 0.2840.6101.0340.5890.4690.7011.1910.7970.0100.973
201107201110201201201204201207201210201301201304201307201310
per share eps 0.6400.1800.2610.4300.6400.3500.2470.4900.8800.470
CPI 225.922226.421226.665230.085229.104231.317230.280232.531233.596233.546
Adj_EPS 0.6710.1880.2730.4430.6620.3580.2540.4990.8930.477
200901200904200907200910201001201004201007201010201101201104
per share eps 0.1030.3200.5100.2300.1410.3400.5800.2900.2090.340
CPI 211.143213.240215.351216.177216.687218.009218.011218.711220.223224.906
Adj_EPS 0.1160.3560.5610.2520.1540.3690.6300.3140.2250.358
200607200610200701200704200707200710200801200804200807200810
per share eps 0.6000.4600.3950.4800.6700.4300.2750.4100.6300.330
CPI 203.500201.800202.416206.686208.299208.936211.080214.823219.964216.573
Adj_EPS 0.6990.5400.4620.5500.7620.4880.3090.4520.6790.361

Add all the adjusted EPS together and divide 10 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.

Lowe's Companies Inc's Shiller P/E Ratio of today is calculated as

Shiller P/E Ratio=Share Price/E10
=79.55/1.98
=40.18

* 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 Lowe's Companies Inc was 40.31. The lowest was 10.22. And the median was 20.46.


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.

Lowe's Companies Inc Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
e10 1.011.211.311.411.521.621.681.781.881.98

Lowe's Companies Inc Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
e10 1.781.821.891.891.881.932.002.031.980.00
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