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Nike Inc (NYSE:NKE)
E10
$1.29 (As of Feb. 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.

Nike Inc's adjusted earnings per share data for the three months ended in Feb. 2016 was $0.550. Add all the adjusted EPS for the past 10 years together and divide 10 will get our e10, which is $1.29 for the trailing ten years ended in Feb. 2016.

As of today, Nike Inc's current stock price is $51.89. Nike Inc's E10 for the quarter that ended in Feb. 2016 was $1.29. Nike Inc's Shiller P/E Ratio of today is 40.22.

During the past 13 years, the highest Shiller P/E Ratio of Nike Inc was 54.17. The lowest was 18.50. And the median was 31.76.


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, Nike Inc's adjusted earnings per share data for the three months ended in Feb. 2016 was:

Adj_EPS=Earnigns per Share/CPI of Feb. 2016 (Change)*Current CPI (Feb. 2016)
=0.55/237.111*237.111
=0.550

Current CPI (Feb. 2016) = 237.111.

Nike Inc Quarterly Data

201311201402201405201408201411201502201505201508201511201602
per share eps 0.2950.3750.3900.5450.3700.4500.4910.6700.4500.550
CPI 233.069234.781237.900237.852236.151234.722237.805238.316237.336237.111
Adj_EPS 0.3000.3790.3890.5430.3720.4550.4900.6670.4500.550
201105201108201111201202201205201208201211201302201305201308
per share eps 0.3100.3400.2500.3000.2860.3050.2100.4750.3570.430
CPI 225.964226.545226.230227.663229.815230.379230.221232.166232.945233.877
Adj_EPS 0.3250.3560.2620.3120.2950.3140.2160.4850.3630.436
200811200902200905200908200911201002201005201008201011201102
per share eps 0.2000.1250.1740.2600.1900.2530.2630.2850.2350.270
CPI 212.425212.193213.856215.834216.330216.741218.178218.312218.803221.309
Adj_EPS 0.2230.1400.1930.2860.2080.2770.2860.3100.2550.289
200605200608200611200702200705200708200711200802200805200808
per share eps 0.1600.1850.1600.1700.2150.2800.1780.2300.2440.258
CPI 202.500203.900201.500203.499207.949207.917210.177211.693216.632219.086
Adj_EPS 0.1870.2150.1880.1980.2450.3190.2010.2580.2670.279

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.

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

Shiller P/E Ratio=Share Price/E10
=51.89/1.29
=40.22

* 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 Nike Inc was 54.17. The lowest was 18.50. And the median was 31.76.


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.

Nike Inc Annual Data

May06May07May08May09May10May11May12May13May14May15
e10 0.350.430.510.560.630.740.830.941.061.17

Nike Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
e10 0.991.031.061.091.101.131.171.221.241.29
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