Switch to:
Ross Stores Inc (NAS:ROST)
E10
$2.71 (As of Jan. 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.

Ross Stores Inc's adjusted earnings per share data for the three months ended in Jan. 2014 was $1.033. 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 $2.71 for the trailing six years ended in Jan. 2014.

As of today, Ross Stores Inc's current stock price is $68.53. Ross Stores Inc's E10 for the trailing six years ended in Jan. 2014 was $2.71. Ross Stores Inc's Shiller P/E Ratio of today is 25.31.

During the past 13 years, the highest Shiller P/E Ratio of Ross Stores Inc was 35.81. The lowest was 13.75. And the median was 23.42.


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, Ross Stores Inc's adjusted earnings per share data for the three months ended in Jan. 2014 was:

Adj_EPS=Earnigns per Share/CPI of Jan. 2014*CPI of Current
=1.022/233.916*236.511
=1.033

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

Current CPI = 236.511.

Ross Stores Inc Quarterly Data

201110201201201204201207201210201301201304201307201310201401
per share eps 0.6300.8470.9300.8100.7201.0741.0700.9800.8001.022
CPI 226.421226.665230.085229.104231.317230.280232.531233.596233.546233.916
Adj_EPS 0.6580.8840.9560.8360.7361.1031.0880.9920.8101.033
200904200907200910201001201004201007201010201101201104201107
per share eps 0.3600.4100.4200.5800.5800.5350.5100.6850.7400.640
CPI 213.240215.351216.177216.687218.009218.011218.711220.223224.906225.922
Adj_EPS 0.3990.4500.4600.6330.6290.5800.5520.7360.7780.670
200804200807200810200901
per share eps 0.3000.2700.2200.380
CPI 214.823219.964216.573211.143
Adj_EPS 0.3300.2900.2400.426

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.

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

Shiller P/E Ratio=Share Price/E10
=68.53/2.71
=25.29

* 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 Ross Stores Inc was 35.81. The lowest was 13.75. And the median was 23.42.


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.

Ross Stores Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
e10 0.580.640.700.800.871.051.341.732.172.71

Ross Stores Inc Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
e10 1.631.731.861.972.082.172.332.482.582.71
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)
Free 7-day Trial
FEEDBACK
Hide