Switch to:
Walgreen Co (NYSE:WAG)
E10
\$2.48 (As of Aug. 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.

Walgreen Co's adjusted earnings per share data for the three months ended in Aug. 2014 was \$-0.251. 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 \$2.48 for the trailing six years ended in Aug. 2014.

As of today, Walgreen Co's current stock price is \$68.22. Walgreen Co's E10 for the trailing six years ended in Aug. 2014 was \$2.48. Walgreen Co's Shiller P/E Ratio of today is 27.40.

During the past 13 years, the highest Shiller P/E Ratio of Walgreen Co was 42.03. The lowest was 12.07. And the median was 21.03.

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, Walgreen Co's adjusted earnings per share data for the three months ended in Aug. 2014 was:

 Adj_EPS = Earnigns per Share / CPI of Aug. 2014 * CPI of Current = -0.25 / 237.852 * 238.389 = -0.251

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

Current CPI = 238.389.

Walgreen Co Quarterly Data

 201205 201208 201211 201302 201305 201308 201311 201402 201405 201408 per share eps 0.62 0.394 0.43 0.79 0.650 0.686 0.720 0.780 0.750 -0.250 CPI 229.815 230.379 230.221 232.166 232.945 233.877 233.069 234.781 237.900 237.852 Adj_EPS 0.643 0.408 0.445 0.811 0.665 0.699 0.736 0.792 0.752 -0.251 200911 201002 201005 201008 201011 201102 201105 201108 201111 201202 per share eps 0.49 0.68 0.47 0.48 0.620 0.800 0.650 0.869 0.630 0.780 CPI 216.33 216.741 218.178 218.312 218.803 221.309 225.964 226.545 226.230 227.663 Adj_EPS 0.54 0.748 0.514 0.524 0.675 0.862 0.686 0.914 0.664 0.817 200811 200902 200905 200908 per share eps 0.41 0.65 0.53 0.439 CPI 212.425 212.193 213.856 215.834 Adj_EPS 0.46 0.73 0.591 0.485

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.

Walgreen Co's Shiller P/E Ratio of today is calculated as

 Shiller P/E Ratio = Share Price / E10 = 68.22 / 2.48 = 27.51

* 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 Walgreen Co was 42.03. The lowest was 12.07. And the median was 21.03.

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.

Walgreen Co Annual Data

 Aug05 Aug06 Aug07 Aug08 Aug09 Aug10 Aug11 Aug12 Aug13 Aug14 e10 1.18 1.36 1.56 1.81 1.91 2.03 2.31 2.43 2.50 2.48

Walgreen Co Quarterly Data

 May12 Aug12 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 e10 2.42 2.43 2.40 2.43 2.46 2.50 2.53 2.54 2.61 2.48
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)